Based on 15 case studies as well as a literature review, this study assesses the links between corporate environmental governance and financial performance.
The overall evidence of the study is strongly supporting the argument that sound environmental governance policies, practices and performances are likely to improve in improved financial performance. More detailed findings of the study include:
- Changes in financial performance are more marked when a sector has higher environmental impacts and risks.
- Shareholder values, share prices, operational costs and risk and reputation issues are the common indicators with which changes in financial performance are measured. Those indicators are likely to be chosen because they are easily understood by mainstream investors and financial analysts.
- Longevity of impact is difficult to assess as most studies do not take a time horizon of longer than five years. In the few studies where longer time frames have been applied, it could be revealed that a long-term environmental governance strategy could result in a continuing financial benefit.
Case studies of the companies include: Jupiter Ecology Fund, Winslow Green Growth Fund, Integrated Oil& Gas, EU and US Electric Utilities, Forest& paper Products, Water Utilities, 3M, Baxter International, The Co-operative Bank, Iceland, Monsanto, PSE Peugeot Citroen, Shell, Vestas Wind Systems, Xstrata Plc.