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Eco-efficiency and firm value

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  • Sinkin, Charlene
  • Wright, Charlotte J.
  • Burnett, Royce D.

Abstract

Eco-efficiency refers to a process that seeks to maximize the effectiveness of business processes while minimizing their impacts on the environment. Fundamental to eco-efficiency is adoption of a management philosophy that stimulates the search for environmental improvements that yield parallel economic benefits [President's Council on Sustainable Development, 1996a. Sustainable America: A New Consensus for Prosperity, Opportunity, and a Healthy Environment. Government Printing Office, Washington DC; President's Council on Sustainable Development, 1996b. Eco-efficiency: Task Force Report. Government Printing Office, Washington DC; World Business Council for Sustainable Development (WBCSD), 2000. Eco-efficiency: Creating More Value with Less Input. Geneva]. Eco-efficiency is increased by activities that create economic value while continuously reducing ecological impacts and the use of natural resources [DeSimone, L., Popoff, F., 1997. Eco-efficiency: The Business Link To Sustainable Development. MIT Press, Cambridge, MA]. This study empirically examines the proposition that implementation of eco-efficient business strategies is associated with higher firm value. We posit that, firms which adopt eco-efficient business strategies and, as a consequence, achieve reduced costs and increased profits should be more highly valued by the market than similar firms that do not adopt eco-efficient business strategies. Our empirical testing supports this proposition.

Suggested Citation

  • Sinkin, Charlene & Wright, Charlotte J. & Burnett, Royce D., 2008. "Eco-efficiency and firm value," Journal of Accounting and Public Policy, Elsevier, vol. 27(2), pages 167-176.
    • Handle: RePEc:eee:jappol:v:27:y:2008:i:2:p:167-176
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    Cited by:

    1. Semenova, Natalia, 2010. "Corporate Environmental Performance: Consistency of Metrics and Identification of Drivers," Sustainable Investment and Corporate Governance Working Papers 2010/9, Sustainable Investment Research Platform.
    2. Thierry Bréchet & Sylvette Ly, 2013. "The many traps of green technology promotion," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 73-91, January.
    3. Prakash J. Singh & Kannan Sethuraman & Jocelin Y. Lam, 2017. "Impact of Corporate Social Responsibility Dimensions on Firm Value: Some Evidence from Hong Kong and China," Sustainability, MDPI, vol. 9(9), pages 1-24, August.
    4. Choi, Bobae & Luo, Le, 2021. "Does the market value greenhouse gas emissions? Evidence from multi-country firm data," The British Accounting Review, Elsevier, vol. 53(1).
    5. Alberto Simboli & Raffaella Taddeo & Anna Morgante, 2014. "Value and Wastes in Manufacturing. An Overview and a New Perspective Based on Eco-Efficiency," Administrative Sciences, MDPI, vol. 4(3), pages 1-19, July.
    6. Shyamal Gondkar & Sivakumar Sreeramagiri & Edwin Zondervan, 2012. "Methodology for Assessment and Optimization of Industrial Eco-Systems," Challenges, MDPI, vol. 3(1), pages 1-21, June.
    7. Sylvain Marsat & Benjamin Williams, 2013. "CSR and Market Valuation: International Evidence," Post-Print hal-02156596, HAL.
    8. 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.
    9. Mario La Torre & Fabiomassimo Mango & Arturo Cafaro & Sabrina Leo, 2020. "Does the ESG Index Affect Stock Return? Evidence from the Eurostoxx50," Sustainability, MDPI, vol. 12(16), pages 1-12, August.
    10. Cai, Weixing & Lee, Edward & Xu, Alice Liang & Zeng, Cheng (Colin), 2019. "Does corporate social responsibility disclosure reduce the information disadvantage of foreign investors?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 34(C), pages 12-29.
    11. Li, Bin, 2024. "Leading role of natural resources, eco-efficiency assessment, and energy transition in environmental sustainability: A depth of digital transformation," Resources Policy, Elsevier, vol. 94(C).
    12. Isabel Lourenço & Manuel Branco & José Curto & Teresa Eugénio, 2012. "How Does the Market Value Corporate Sustainability Performance?," Journal of Business Ethics, Springer, vol. 108(4), pages 417-428, July.
    13. Pavlopoulos, Athanasios & Magnis, Chris & Iatridis, George Emmanuel, 2019. "Integrated reporting: An accounting disclosure tool for high quality financial reporting," Research in International Business and Finance, Elsevier, vol. 49(C), pages 13-40.
    14. Marta Arbelo-Pérez & Yaiza Armas-Cruz & Antonio Arbelo, 2022. "Environmental strategy and firm performance: A new methodological proposal," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(8), pages 283-292.
    15. Soyemi Kenny Adedapo & Okewale Joel Adeniyi & Olaniyan Joshua Damilare, 2021. "Environmental Responsiveness and Firm Value: Evidence from Nigeria," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 9(1), pages 133-155, September.
    16. Jun Hyeok Choi & Saerona Kim & D.-H. Yang, 2019. "Do Managers Pay CSR for Private Motivation? A Dividend Tax Cut Case in Korea," Sustainability, MDPI, vol. 11(15), pages 1-17, July.
    17. Wenqiang Jiang & Baocai Su & Shuisheng Fan, 2023. "Spatial Disequilibrium and Dynamic Evolution of Eco-Efficiency in China’s Tea Industry," Sustainability, MDPI, vol. 15(12), pages 1-15, June.
    18. Florina Bran & Ildiko Ioan & Carmen Valentina Rădulescu, 2010. "Internal Drivers Of Environmental Performance. Case Study: The Trading Activity," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 12(27), pages 145-154, February.
    19. Wong, Jin Boon & Zhang, Qin, 2022. "Stock market reactions to adverse ESG disclosure via media channels," The British Accounting Review, Elsevier, vol. 54(1).
    20. Isabel Lourenço & Jeffrey Callen & Manuel Branco & José Curto, 2014. "The Value Relevance of Reputation for Sustainability Leadership," Journal of Business Ethics, Springer, vol. 119(1), pages 17-28, January.
    21. Gaurav Jyoti & Ashu Khanna, 2024. "How does sustainability performance affect firms' market performance? An empirical investigation in the Indian context," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 20457-20483, August.
    22. Anne Bergmann, 2016. "The Link between Corporate Environmental and Corporate Financial Performance—Viewpoints from Practice and Research," Sustainability, MDPI, vol. 8(12), pages 1-15, November.
    23. Markus Hang & Jerome Geyer‐Klingeberg & Andreas W. Rathgeber, 2019. "It is merely a matter of time: A meta‐analysis of the causality between environmental performance and financial performance," Business Strategy and the Environment, Wiley Blackwell, vol. 28(2), pages 257-273, February.
    24. Luo Muchen & Rosita Hamdan & Rossazana Ab-Rahim, 2022. "Data-Driven Evaluation and Optimization of Agricultural Environmental Efficiency with Carbon Emission Constraints," Sustainability, MDPI, vol. 14(19), pages 1-22, September.

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