An Assessment of the Association Between Renewable Energy Utilization and Firm Financial Performance

Hyunju Shin (), Alexander E. Ellinger (), Helenka Hopkins Nolan (), Tyler D. DeCoster () and Forrest Lane ()
Additional contact information
Hyunju Shin: Georgia Southern University
Alexander E. Ellinger: University of Alabama
Helenka Hopkins Nolan: HHN Consulting, LLC
Tyler D. DeCoster: Pricewaterhouse Coopers, LLC
Forrest Lane: Sam Houston State University

Journal of Business Ethics, 2018, vol. 151, issue 4, No 16, 1138 pages

Abstract: Abstract Contemporary research highlights multiple societal and environmental benefits in addition to potential economic advantages associated with renewable energy (RE) utilization. As federal and state incentives for investments in RE technologies become more prevalent, RE sources represent increasingly viable alternatives to established fossil fuel energy. RE utilization is recognized as a key component of “green” product innovation that helps firms reduce the environmental impact of production processes and diminish their ecological footprints and energy consumption. Yet, despite consistent evidence that corporate sustainability initiatives are favorably associated with firm performance, the limited research that examines associations between RE initiatives and firm performance yields mixed results and an explicit link has yet to be established. Drawing on the natural resource-based view of the firm, we examine the association between RE utilization and firm financial performance over time. Annual ROI, Tobin’s Q, and operating margin for large U.S. firms identified as exceptional users of RE in the EPA’s Fortune 500 Top Green Power Partners list are compared with their respective industry medians over a 7-year period (2007–2013) and post hoc bootstrapping and sensitivity analyses are performed to further validate the study findings. Our research advances current knowledge about the influence of RE utilization by demonstrating that top RE user firms consistently generated superior financial performance compared to their industry competitors. As such, the study findings lend credence to the existence of a business case that complements the societal and environmental benefits of RE utilization.

Keywords: Clean energy; Corporate social responsibility; Corporate sustainability; Environmental responsibility; Environmental sustainability management; Natural resource-based view (NRBV); Renewable energy; Sensitivity analysis; Sustainable resources (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (15)

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DOI: 10.1007/s10551-016-3249-9

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