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The Impact of Corporate Sustainability on Organizational Processes and Performance

Author

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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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    References listed on IDEAS

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    Cited by:

    1. repec:taf:jsustf:v:6:y:2016:i:4:p:292-300 is not listed on IDEAS
    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. Oecd, 2017. "Making trade work for all," OECD Trade Policy Papers 202, OECD Publishing.
    5. repec:gam:jsusta:v:10:y:2018:i:4:p:909-:d:137401 is not listed on IDEAS
    6. repec:eee:mulfin:v:40:y:2017:i:c:p:33-46 is not listed on IDEAS
    7. repec:eee:energy:v:136:y:2017:i:c:p:16-31 is not listed on IDEAS

    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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