IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v30y2021i7p3065-3078.html
   My bibliography  Save this article

Paving the road toward eco‐effectiveness: Exploring the link between greenhouse gas emissions and firm performance

Author

Listed:
  • Angeloantonio Russo
  • Stefano Pogutz
  • Nicola Misani

Abstract

Climate change has increasingly attracted business attention over the last decade, focusing particularly on the eco‐efficiency debate. The goal of this paper is twofold. First, we contribute to the ongoing debate on the effects of environmental strategies on firm performance. We investigate this relationship by considering the relative greenhouse gas emissions (GHG) as a predictor of the eco‐efficiency of firms' environmental strategies. GHG emissions are a direct indicator of the environmental performance and effectively measure the firm's efforts in mitigating the impacts related to its processes and products. Second, we investigate the drivers that lead to an increase in the firm's environmental impact under the conditions of increasing market performance by the firm, therefore paving the road to the concept of eco‐effectiveness of corporate environmental strategies. To test our hypotheses, we use a sample of worldwide listed companies derived from the S&P 1200 list. A longitudinal analysis is run through generalized least squares regression models over the period 2004–2016. Results offer evidence of the direct relationship between the level of absolute emissions and market performance of the firm. Therefore, the findings have significant implications on the way we conceptualize corporate environmental sustainability and environmental strategies, shedding new light on the relation between environmental pressures and corporate growth.

Suggested Citation

  • Angeloantonio Russo & Stefano Pogutz & Nicola Misani, 2021. "Paving the road toward eco‐effectiveness: Exploring the link between greenhouse gas emissions and firm performance," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3065-3078, November.
    • Handle: RePEc:bla:bstrat:v:30:y:2021:i:7:p:3065-3078
    DOI: 10.1002/bse.2789
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.2789
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.2789?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Huppes, Gjalt & Ishikawa, Masanobu, 2007. "Sustainability evaluation: Diverging routes recombined?," Ecological Economics, Elsevier, vol. 62(1), pages 199-200, April.
    2. Shameek Konar & Mark A. Cohen, 2001. "Does The Market Value Environmental Performance?," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 281-289, May.
    3. Berchicci, L. & King, A.A., 2007. "Postcards from the Edge: A Review of the Business and Environment Literature," ERIM Report Series Research in Management ERS-2007-085-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    4. Stuart L. Hart & Gautam Ahuja, 1996. "Does It Pay To Be Green? An Empirical Examination Of The Relationship Between Emission Reduction And Firm Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 5(1), pages 30-37, March.
    5. Frank Figge & Tobias Hahn & Stefan Schaltegger & Marcus Wagner, 2002. "The Sustainability Balanced Scorecard – linking sustainability management to business strategy," Business Strategy and the Environment, Wiley Blackwell, vol. 11(5), pages 269-284, September.
    6. Misani, Nicola, 2020. "Sustainability and Implicit Contracts," MPRA Paper 104963, University Library of Munich, Germany.
    7. Solveig Lothe & Ingunn Myrtveit & Teresa Trapani, 1999. "Compensation systems for improving environmental performance," Business Strategy and the Environment, Wiley Blackwell, vol. 8(6), pages 313-321, November.
    8. Andrew King & Michael Lenox, 2002. "Exploring the Locus of Profitable Pollution Reduction," Management Science, INFORMS, vol. 48(2), pages 289-299, February.
    9. Kolk, Ans & Pinkse, Jonatan, 2004. "Market Strategies for Climate Change," European Management Journal, Elsevier, vol. 22(3), pages 304-314, June.
    10. Holm, Stig-Olof & Englund, Göran, 2009. "Increased ecoefficiency and gross rebound effect: Evidence from USA and six European countries 1960-2002," Ecological Economics, Elsevier, vol. 68(3), pages 879-887, January.
    11. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    12. Andrew A. King & J. Myles Shaver, 2001. "Are aliens green? Assessing foreign establishments' environmental conduct in the United states," Strategic Management Journal, Wiley Blackwell, vol. 22(11), pages 1069-1085, November.
    13. Andrew A. King & Michael J. Lenox, 2001. "Does It Really Pay to Be Green? An Empirical Study of Firm Environmental and Financial Performance: An Empirical Study of Firm Environmental and Financial Performance," Journal of Industrial Ecology, Yale University, vol. 5(1), pages 105-116, January.
    14. Zi-Lin He & Poh-Kam Wong, 2004. "Exploration vs. Exploitation: An Empirical Test of the Ambidexterity Hypothesis," Organization Science, INFORMS, vol. 15(4), pages 481-494, August.
    15. Stefan Lewandowski, 2017. "Corporate Carbon and Financial Performance: The Role of Emission Reductions," Business Strategy and the Environment, Wiley Blackwell, vol. 26(8), pages 1196-1211, December.
    16. Vastola, Vincenzo & Russo, Angeloantonio & Vurro, Clodia, 2017. "Dealing with Cultural Differences in Environmental Management: Exploring the CEP-CFP Relationship," Ecological Economics, Elsevier, vol. 134(C), pages 267-275.
    17. Christoph Trumpp & Thomas Guenther, 2017. "Too Little or too much? Exploring U‐shaped Relationships between Corporate Environmental Performance and Corporate Financial Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 26(1), pages 49-68, January.
    18. Glen Dowell & Stuart Hart & Bernard Yeung, 2000. "Do Corporate Global Environmental Standards Create or Destroy Market Value?," Management Science, INFORMS, vol. 46(8), pages 1059-1074, August.
    19. Pushpika Vishwanathan & Hans (J.) van Oosterhout & Pursey P. M. A. R. Heugens & Patricio Duran & Marc van Essen, 2020. "Strategic CSR: A Concept Building Meta‐Analysis," Journal of Management Studies, Wiley Blackwell, vol. 57(2), pages 314-350, March.
    20. Thomas Dyllick & Kai Hockerts, 2002. "Beyond the business case for corporate sustainability," Business Strategy and the Environment, Wiley Blackwell, vol. 11(2), pages 130-141, March.
    21. Timo Busch & Stefan Lewandowski, 2018. "Corporate Carbon and Financial Performance: A Meta‐analysis," Journal of Industrial Ecology, Yale University, vol. 22(4), pages 745-759, August.
    22. William Young & Fiona Tilley, 2006. "Can businesses move beyond efficiency? The shift toward effectiveness and equity in the corporate sustainability debate," Business Strategy and the Environment, Wiley Blackwell, vol. 15(6), pages 402-415, November.
    23. Robert D. Klassen & Curtis P. McLaughlin, 1996. "The Impact of Environmental Management on Firm Performance," Management Science, INFORMS, vol. 42(8), pages 1199-1214, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francisco Porles-Ochoa & Ruben Guevara, 2023. "Moderation of Clean Energy Innovation in the Relationship between the Carbon Footprint and Profits in CO₂e-Intensive Firms: A Quantitative Longitudinal Study," Sustainability, MDPI, vol. 15(13), pages 1-19, June.
    2. Maryam Afghah & Seyed Mojtaba Sajadi & Seyed Mostafa Razavi & Mohammadreza Taghizadeh‐Yazdi, 2023. "Hard dimensions evaluation in sustainable supply chain management for environmentally adaptive and mitigated adverse eco‐effect environmental policies," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 5044-5067, November.
    3. Alexandra França & Lucas López‐Manuel & Antonio Sartal & Xosé H. Vázquez, 2023. "Adapting corporations to climate change: How decarbonization impacts the business strategy–performance nexus," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5615-5632, December.
    4. Oksana Seroka-Stolka, 2023. "Enhancing Environmental Sustainability: Stakeholder Pressure and Corporate CO 2 -Related Performance—An Examination of the Mediating and Moderating Effects of Corporate Decarbonization Strategies," Sustainability, MDPI, vol. 15(19), pages 1-18, September.
    5. Benkraiem, Ramzi & Dubocage, Emmanuelle & Lelong, Yann & Shuwaikh, Fatima, 2023. "The effects of environmental performance and green innovation on corporate venture capital," Ecological Economics, Elsevier, vol. 210(C).
    6. Mariani, Massimo & Caragnano, Alessandra & D'Ercole, Francesco & Frascati, Domenico, 2024. "Carbon intensity and market pricing: An asymmetric valuation," International Review of Financial Analysis, Elsevier, vol. 93(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antonio Salvi & Felice Petruzzella & Anastasia Giakoumelou, 2018. "CSR and Financial Performance: Trick Or Treat? A Longitudinal Study on Holistic CSR Practices," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(6), pages 1-43, April.
    2. Suhong Li & Thomas Ngniatedema & Fang Chen, 2017. "Understanding the Impact of Green Initiatives and Green Performance on Financial Performance in the US," Business Strategy and the Environment, Wiley Blackwell, vol. 26(6), pages 776-790, September.
    3. Surender Kumar & Pritika Dua, 2022. "Environmental management practices and financial performance: evidence from large listed Indian enterprises," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 65(1), pages 37-61, January.
    4. Tzouvanas, Panagiotis & Kizys, Renatas & Chatziantoniou, Ioannis & Sagitova, Roza, 2020. "Environmental and financial performance in the European manufacturing sector: An analysis of extreme tail dependency," The British Accounting Review, Elsevier, vol. 52(6).
    5. Danquah Jeff Boakye & Ishmael TIngbani & Gabriel Ahinful & Isaac Damoah & Venancio Tauringana, 2020. "Sustainable environmental practices and financial performance: Evidence from listed small and medium‐sized enterprise in the United Kingdom," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2583-2602, September.
    6. Lee, Ki-Hoon & Min, Byung & Yook, Keun-Hyo, 2015. "The impacts of carbon (CO2) emissions and environmental research and development (R&D) investment on firm performance," International Journal of Production Economics, Elsevier, vol. 167(C), pages 1-11.
    7. Wolfgang Schultze & Ramona Trommer, 2012. "The concept of environmental performance and its measurement in empirical studies," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 22(4), pages 375-412, January.
    8. Sergio Manrique & Carmen-Pilar Martí-Ballester, 2017. "Analyzing the Effect of Corporate Environmental Performance on Corporate Financial Performance in Developed and Developing Countries," Sustainability, MDPI, vol. 9(11), pages 1-30, October.
    9. Basil Al‐Najjar & Aspioni Anfimiadou, 2012. "Environmental Policies and Firm Value," Business Strategy and the Environment, Wiley Blackwell, vol. 21(1), pages 49-59, January.
    10. Semenova, Natalia & Hassel, Lars, 2008. "Industry Risk Moderates the Relation between Environmental and Financial Performance," Sustainable Investment and Corporate Governance Working Papers 2008/2, Sustainable Investment Research Platform.
    11. Eng, Li Li & Fikru, Mahelet G. & Vichitsarawong, Thanyaluk, 2021. "The impact of toxic chemical releases and their management on financial performance," Advances in accounting, Elsevier, vol. 53(C).
    12. Stefan Ambec & Paul Lanoie, 2007. "When and Why Does It Pay To Be Green?," CIRANO Working Papers 2007s-20, CIRANO.
    13. Stephen Bahadar & Muhammad Nadeem & Rashid Zaman, 2023. "Toxic chemical releases and idiosyncratic return volatility: A prospect theory perspective," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2109-2143, June.
    14. Joern Hoppmann & Alice Sakhel & Marcel Richert, 2018. "With a little help from a stranger: The impact of external change agents on corporate sustainability investments," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 1052-1066, November.
    15. Wayne Fu & Che‐Ping (Jack) Su, 2021. "The implications of efficiency differences in sustainable development: An empirical study in the consumer product industry," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2489-2504, July.
    16. Garcés-Ayerbe, Concepción & Cañón-de-Francia, Joaquín, 2017. "The Relevance of Complementarities in the Study of the Economic Consequences of Environmental Proactivity: Analysis of the Moderating Effect of Innovation Efforts," Ecological Economics, Elsevier, vol. 142(C), pages 21-30.
    17. Tzouvanas, Panagiotis & Kizys, Renatas & Chatziantoniou, Ioannis & Sagitova, Roza, 2020. "Environmental disclosure and idiosyncratic risk in the European manufacturing sector," Energy Economics, Elsevier, vol. 87(C).
    18. Vastola, Vincenzo & Russo, Angeloantonio & Vurro, Clodia, 2017. "Dealing with Cultural Differences in Environmental Management: Exploring the CEP-CFP Relationship," Ecological Economics, Elsevier, vol. 134(C), pages 267-275.
    19. Joaquín Cañón-de-Francia & Concepción Garcés-Ayerbe, 2009. "ISO 14001 Environmental Certification: A Sign Valued by the Market?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(2), pages 245-262, October.
    20. Kimitaka Nishitani & M.B. Haider & Katsuhiko Kokubu, 2014. "Corporate Environmental Initiatives and Shareholder Value: Focusing on the Role of Environmental Information and Its Credibility," Discussion Paper Series DP2014-13, Research Institute for Economics & Business Administration, Kobe University.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:30:y:2021:i:7:p:3065-3078. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.