The relationship between emissions reduction and financial performance: Are Portuguese companies in a sustainable development path?

Abstract

Companies are increasingly adopting strategies that simultaneously reduce their negative impact on the environment and minimize the extraction of natural and energy resources, used as inputs in their production process. The concern for the sustainable development of countries and regions and environmental sustainability of companies is increasingly present. Nevertheless, does it make up for the increased costs to protect the environment? The objective of this study is to evaluate how the environmental performance (EP) and the financial performance (FP) of companies are related, applying to the specific case of Portuguese companies during the 2008-2016 period.The relationship between pollution and FP reveals to be positive. Still, firms regard EP as additional costs, and these efforts do not seem to be strong enough to lead to a better FP. Both munificence and resource slack are included and reveal to have positive effects over FP and in the EP-FP relationship. Highlights• Pollution and financial performance relationship is positive (negative EP-FP link).• Environmental performance are additional costs; firms favor financial performance.• Munificence and slack have positive effects over financial performance.• Munificent environments provide an opportunity for environmental investments.• Scarce slack resources: less willingness to undertake social-responsible actions. K E Y W O R D S environmental munificence, environmental performance, environmental sustainability, financial performance, Portuguese companies, resource slack

Does Water, Waste, and Energy Consumption Influence Firm Performance? Panel Data Evidence from S&P 500 Information Technology Sector

“…The selected variables are described in Table 4 . Consistent with earlier research, in order to measure firm performance, the quantitative investigation comprised both accounting measures—such as return on assets [ 2 , 19 , 20 , 25 , 26 , 30 , 32 , 33 , 34 , 35 , 39 , 41 , 77 , 78 , 85 , 86 , 87 , 88 , 99 , 100 , 101 ], return on common equity [ 19 , 20 , 25 , 30 , 32 , 33 , 39 , 42 , 44 , 86 , 99 ], return on capital [ 19 , 20 ], and return on invested capital [ 25 ]—and market-based measures of performance like price-to-book value [ 34 ]. Additionally, several measures of firm characteristics were included in order to counteract any bias and error that may have distorted the association among selected variables [ 41 ].…”

“…Like prior studies [ 3 , 13 , 20 , 24 , 25 , 26 , 27 , 30 , 31 , 33 , 35 , 39 , 42 , 44 , 46 , 77 , 78 , 79 , 83 , 85 , 90 , 91 , 99 , 100 , 101 ], firm size was included since large companies generally register a superior profit level compared with small corporations [ 20 ]. Larger firms are supposed to invest more in ecologically responsive machineries, as they are expected to have more funds and because they accept higher litigation risks [ 79 ].…”

Sustainability Orientation and Focus in Logistics and Supply Chains

“…The authors of [17] exposed that governments worldwide have introduced regulations for industries to produce sustainable items, consequently increasing the demand for environmentally friendly materials in various industries [18]. It was also mentioned [19] that companies are increasingly adopting a strategy that includes a positive sustainability aspect, for example, with various inputs in the production process and logistics and supply chain operations [20]. The importance of sustainable development in companies is also mentioned [21] as it is expected to become one of the critical conditions for international competitiveness even in the strongly related field of supply chains and logistics.…”

Environmental performance, carbon performance and earnings management: Empirical evidence for the European capital market

“…With regard to corporate governance variables, board effectiveness has a positive impact on participation in the CDP (Ben‐Amar & McIlkenny, 2015), while board gender diversity has a positive impact on carbon performance (Garcia Martin & Herrero, 2020). With regard to financial consequences, carbon disclosure has a big impact on market reactions, such as decreases in cumulative abnormal returns (Lee, Park, & Klassen, 2015) or increased financial performance (Robiana & Madaleno, 2020). Moreover, there are indications that carbon performance and carbon disclosure are connected (e.g., Giannarakis, Zafeiriou, Arabatzis, & Partalidou, 2018; Giannarakis, Zafeiriou, & Sariannidis, 2017; Hassan & Romilly, 2018).…”