Environmental Performance and Profits

In this study we investigate how firm level environmental performance (EP) affect firm level economic performance measured as profit efficiency (PE) in a stochastic profit frontier setting. Analyzing firms in Swedish manufacturing 1990-2004, results show that EP induced by environmental policy is not a determinant of PE, while voluntary or non-policy induced EP seem to have a significant (+) effect on firm PE in most sectors. The evidence generally supports the idea that good EP is also good for business, as long as EP is not brought on by policy measures, in this case a CO2 tax.

[1]  D. Siegel,et al.  Corporate social responsibility and economic performance , 2006 .

[2]  Mitsutsugu Hamamoto,et al.  Environmental regulation and the productivity of Japanese manufacturing industries , 2006 .

[3]  D. Siegel,et al.  Strategic Corporate Social Responsibility and Environmental Sustainability , 2011 .

[4]  M. Porter,et al.  Toward a New Conception of the Environment-Competitiveness Relationship , 1995 .

[5]  Samuel B. Graves,et al.  The corporate social performance-financial performance link , 1997 .

[6]  Lammertjan Dam,et al.  Why do Firms Do Good? Evidence from Managerial Efficiency , 2009 .

[7]  Madhu Khanna,et al.  Non-mandatory Approaches to Environmental Protection , 2002 .

[8]  Rolf Färe,et al.  Environmental Performance : an Index Number Approach , 2004 .

[9]  G. Battese,et al.  A model for technical inefficiency effects in a stochastic frontier production function for panel data , 1995 .

[10]  William H. Lesser,et al.  Environmental Protection and the Social Responsibility of Firms: Perspectives from Law, Economics and Business , 2008 .

[11]  C. Lovell,et al.  Stochastic Frontier Analysis: Frontmatter , 2000 .

[12]  Rolf Färe,et al.  Toxic releases: An environmental performance index for coal-fired power plants , 2010 .

[13]  Rolf Färe,et al.  New directions : efficiency and productivity , 2004 .

[14]  A E Stack,et al.  A social responsibility. , 1994, Journal of the American Dental Association.

[15]  M. Rauscher.  Voluntary Emission Reductions, Social Rewards, and Environmental Policy , 2006, SSRN Electronic Journal.

[16]  D. Swanson,et al.  Toward Integrative Corporate Citizenship: Research Advances in Corporate Social Performance , 2008 .

[17]  T. Lundgren.  A Microeconomic Model of Corporate Social Responsibility , 2011 .

[18]  D. Swanson,et al.  Toward Integrative Corporate Citizenship , 2008 .

[19]  S. Kumbhakar,et al.  Estimation of Profit Functions When Profit is Not Maximum , 2001 .

[20]  R. Brännlund,et al.  Environmental policy without costs? : A review of the Porter hypothesis , 2009 .

[21]  Rolf Färe,et al.  Social responsibility: U.S. power plants 1985–1998 , 2006 .

[22]  Runar Brännlund,et al.  Environmental Performance and Climate Policy , 2011 .

[23]  T. Palva,et al.  Pages 1-19 , 2001 .

[24]  T. Coelli.  A computer program for frontier production function estimation: Frontier version 2.0 , 1992 .