ABSTRACT

The environmental performance leads to improvements in the financial bottom line through a variety of factors such as efficient waste management, premiums on green products, improved public image and the avoidance of non-compliance with the growing scope of environmental legislation. Empirical investigation in the US, where reporting requirements have provided the necessary comparable environmental information, has suggested that there is a clear and positive correlation between company environmental and financial performance. First, the financial performance of each green company was compared to the average financial performance of a number of non-green companies of similar profile in the same sector. Second, each green company was compared to the best financial performer from the non-green sample in the first stage. Green consumerism is maturing and the general public is using the consumer vote to influence corporate attitudes. Economic instruments, both incentives and penalties, are being used more and more to encourage constant improvement.