Abstract
Purpose - This paper analyses the relationship between environmental protection and mid-term financial performance, focusing on when and why this relationship is positive. In particular, we disaggregate environmental protection, differentiating between environmental management practices, environmental proactivity and environmental performance of the organisation. Design/methodology/approach - It uses a cross section survey of 2122 Welsh companies to gather information on environmental practices and the FAME database to collect data on accounting based financial performance. We use regression analysis on a combined sample of 186 Welsh companies to evaluate the effect on performance of different types of environmental protection.Findings - On the whole the results show a positive effect of environmental protection on mid-term financial performance. Financial performance has a positive and significant correlation with environmental proactivity and with environmental performance, while it has a no significant relation with environmental management. Research limitations/implications - The main limitation of the present study is the reduced final sample size including firms’ financial performance information. The present work highlights the interest of breakdown environmental protection when analysing the effect on financial performance. We distinguished theoretically and empirically between environmental management, proactivity and performance. Practical implications - It is pay to be green. Better environmental performance than industrial average, as well as environmental proactivity, have a positive effect on financial performance. Our results highlight the importance of efficiency on environmental management activities.Originality/value - The paper presents a disaggregated analysis of environmental protection in relationship with financial performance. We differentiate between environmental management practices, environmental proactivity and environmental performance of the organisation in their relationship with financial performance.
Purpose - This paper analyses the relationship between environmental protection and mid-term financial performance, focusing on when and why this relationship is positive. In particular, we disaggregate environmental protection, differentiating between environmental management practices, environmental proactivity and environmental performance of the organisation. Design/methodology/approach - It uses a cross section survey of 2122 Welsh companies to gather information on environmental practices and the FAME database to collect data on accounting based financial performance. We use regression analysis on a combined sample of 186 Welsh companies to evaluate the effect on performance of different types of environmental protection.Findings - On the whole the results show a positive effect of environmental protection on mid-term financial performance. Financial performance has a positive and significant correlation with environmental proactivity and with environmental performance, while it has a no significant relation with environmental management. Research limitations/implications - The main limitation of the present study is the reduced final sample size including firms’ financial performance information. The present work highlights the interest of breakdown environmental protection when analysing the effect on financial performance. We distinguished theoretically and empirically between environmental management, proactivity and performance. Practical implications - It is pay to be green. Better environmental performance than industrial average, as well as environmental proactivity, have a positive effect on financial performance. Our results highlight the importance of efficiency on environmental management activities.Originality/value - The paper presents a disaggregated analysis of environmental protection in relationship with financial performance. We differentiate between environmental management practices, environmental proactivity and environmental performance of the organisation in their relationship with financial performance.