Understanding the Relationship between a Facility's Environmental and Financial Performance

ENVIRONMENTAL POLICY AND CORPORATE BEHAVIOUR, N. Johnstone, ed., Edward Elgar/OECD, Chapter 6, pp. 213-259, 2007

34 Pages Posted: 25 Aug 2007

See all articles by Nicole Darnall

Nicole Darnall

Arizona State University - College of Global Futures; School of Sustainability; Sustainable Purchasing Research Initiative

G. Jason Jolley

University of North Carolina at Chapel Hill

Bjarne Ytterhus

Norwegian School of Management (BI)

Abstract

It is often argued that good environmental and commercial performance go hand in hand. In this chapter the links between environmental policy stringency, environmental performance and commercial performance (profitability and sales) for a sample of OECD manufacturing facilities are examined. Using a bivariate probit model for six different indicators of environmental performance (natural resource use, solid waste generation, wastewater effluent, local and regional air pollution, global pollutants, and an aggregate index) it is found that environmental performance has a positive and significant effect on both profitability and sales, indicating the potential for "win wins". However, perceived policy stringency has a negative and significant effect, thus indicating that such "win wins" are not policy-induced.

Keywords: environmental performance, financial performance, environmental policy stringency, international, OECD

JEL Classification: L21, L60, Q20, Q30, Q38, M10

Suggested Citation

Darnall, Nicole and Jolley, G. Jason and Ytterhus, Bjarne, Understanding the Relationship between a Facility's Environmental and Financial Performance. ENVIRONMENTAL POLICY AND CORPORATE BEHAVIOUR, N. Johnstone, ed., Edward Elgar/OECD, Chapter 6, pp. 213-259, 2007, Available at SSRN: https://ssrn.com/abstract=1009756

Nicole Darnall (Contact Author)

Arizona State University - College of Global Futures; School of Sustainability ( email )

800 S Cady Mall, PO Box 87402
Tempe, AZ 85287-5402
United States
602.496.0445 (Phone)

HOME PAGE: http://isearch.asu.edu/profile/1811617

Sustainable Purchasing Research Initiative ( email )

Arizona State University
https://sustainability.asu.edu/spri/
United States

G. Jason Jolley

University of North Carolina at Chapel Hill ( email )

102 Ridge Road
NC 27514
United States

Bjarne Ytterhus

Norwegian School of Management (BI) ( email )

P.O. Box 580

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