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The Impact of Sustainability Practices on Corporate Financial Performance: Literature Trends and Future Research Potential

Ali Alshehhi (), Haitham Nobanee () and Nilesh Khare ()
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Ali Alshehhi: College of Business, Abu Dhabi University, P.O. Box 59911, Abu Dhabi, UAE
Haitham Nobanee: College of Business, Abu Dhabi University, P.O. Box 59911, Abu Dhabi, UAE
Nilesh Khare: Jagran Lakecity Business School, Jagran Lakecity University, Bhopal 462044, India

Sustainability, 2018, vol. 10, issue 2, 1-25

Abstract: This paper presents an analysis of the literature concerning the impact of corporate sustainability on corporate financial performance. The relationship between corporate sustainable practices and financial performance has received growing attention in research, yet a consensus remains elusive. This paper identifies developing trends and the issues that hinder conclusive consensus on that relationship. We used content analysis to examine the literature and establish the current state of research. A total of 132 papers from top-tier journals are shortlisted. We find that 78% of publications report a positive relationship between corporate sustainability and financial performance. Variations in research methodology and measurement of variables lead to the divergent views on the relationship. Furthermore, literature is slowly replacing total sustainability with narrower corporate social responsibility (CSR), which is dominated by the social dimension of sustainability, while encompassing little to nothing of environmental and economic dimensions. Studies from developing countries remain scarce. More research is needed to facilitate convergence in the understanding of the relationship between corporate sustainable practices and financial performance.

Keywords: corporate sustainability; financial performance; sustainability practices; sustainability impact; csr; economical sustainability; environmental sustainability; social sustainability; corporate social performance; corporate environmental performance (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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