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The Impact of Corporate Sustainability on Organizational Processes and Performance

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  • Robert G. Eccles
  • Ioannis Ioannou
  • George Serafeim

Abstract

We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 US companies, we find that corporations that voluntarily adopted sustainability policies by 1993 - termed as High Sustainability companies - exhibit by 2009 distinct organizational processes compared to a matched sample of companies that adopted almost none of these policies - termed as Low Sustainability companies. The boards of directors of High Sustainability companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics. High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.

Suggested Citation

  • Robert G. Eccles & Ioannis Ioannou & George Serafeim, 2012. "The Impact of Corporate Sustainability on Organizational Processes and Performance," NBER Working Papers 17950, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17950
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    Cited by:

    1. N. C. Ashwin Kumar & Camille Smith & Leïla Badis & Nan Wang & Paz Ambrosy & Rodrigo Tavares, 2016. "ESG factors and risk-adjusted performance: a new quantitative model," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(4), pages 292-300, October.
    2. repec:ipg:wpaper:2014-097 is not listed on IDEAS
    3. Fatemi, Ali M. & Fooladi, Iraj J., 2013. "Sustainable finance: A new paradigm," Global Finance Journal, Elsevier, vol. 24(2), pages 101-113.
    4. Kyungbok Kim & Sang-Myung Lee, 2018. "Does Sustainability Affect Corporate Performance and Economic Development? Evidence from the Asia-Pacific region and North America," Sustainability, MDPI, Open Access Journal, vol. 10(4), pages 1-18, March.
    5. Finnerty, Noel & Sterling, Raymond & Coakley, Daniel & Contreras, Sergio & Coffey, Ronan & Keane, Marcus M., 2017. "Development of a Global Energy Management System for non-energy intensive multi-site industrial organisations: A methodology," Energy, Elsevier, vol. 136(C), pages 16-31.
    6. Oecd, 2017. "Making trade work for all," OECD Trade Policy Papers 202, OECD Publishing.
    7. Lawrence, Akvile & Karlsson, Magnus & Nehler, Therese & Thollander, Patrik, 2019. "Effects of monetary investment, payback time and firm characteristics on electricity saving in energy-intensive industry," Applied Energy, Elsevier, vol. 240(C), pages 499-512.
    8. Adriano Stadler & Edson Andrade dos Reis & Elaine Cristina Arantes & Jansen Maia Del Corso, 2017. "Study on Professors’ Perception With Respect to Higher Education Institutions’ Socially Responsible Initiatives," Brazilian Business Review, Fucape Business School, vol. 14(6), pages 592-608, November.
    9. Samet, Marwa & Jarboui, Anis, 2017. "How does corporate social responsibility contribute to investment efficiency?," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 33-46.

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    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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