Eco-efficiency and firm value

Charlene Sinkin, Charlotte J. Wright and Royce D. Burnett

Journal of Accounting and Public Policy, 2008, vol. 27, issue 2, 167-176

Abstract: Eco-efficiency refers to a process that seeks to maximize the effectiveness of business processes while minimizing their impacts on the environment. Fundamental to eco-efficiency is adoption of a management philosophy that stimulates the search for environmental improvements that yield parallel economic benefits [President's Council on Sustainable Development, 1996a. Sustainable America: A New Consensus for Prosperity, Opportunity, and a Healthy Environment. Government Printing Office, Washington DC; President's Council on Sustainable Development, 1996b. Eco-efficiency: Task Force Report. Government Printing Office, Washington DC; World Business Council for Sustainable Development (WBCSD), 2000. Eco-efficiency: Creating More Value with Less Input. Geneva]. Eco-efficiency is increased by activities that create economic value while continuously reducing ecological impacts and the use of natural resources [DeSimone, L., Popoff, F., 1997. Eco-efficiency: The Business Link To Sustainable Development. MIT Press, Cambridge, MA]. This study empirically examines the proposition that implementation of eco-efficient business strategies is associated with higher firm value. We posit that, firms which adopt eco-efficient business strategies and, as a consequence, achieve reduced costs and increased profits should be more highly valued by the market than similar firms that do not adopt eco-efficient business strategies. Our empirical testing supports this proposition.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jappol:v:27:y:2008:i:2:p:167-176

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