A review of the empirical literature combining economic and environmental performance data at the micro-level

Antoine Dechezleprêtre and Tobias Kruse

No 1514, OECD Economics Department Working Papers from OECD Publishing

Abstract: This article reviews the empirical literature combining economic and environmental performance data at the micro-level, i.e. firm- or facility-level. The literature has generally found a positive and statistically significant correlation between economic performance, as measured by stock market returns, and environmental performance, as measured by emissions of pollutants or adoption of international environmental standards. The main reason for this finding seems to be that firms that reduce their material and energy costs experience both better economic performance and lower emissions. There is also evidence that greener firms are able to attract more productive employees and face smaller costs of capital, and that the introduction of green products enhances firms’ profitability. Only a small and recent literature analyses the joint causal impact of environmental regulations on environmental and economic performance. Interestingly, this literature shows that environmental regulations tend to improve environmental performance while not weakening economic performance. However, the evidence so far is limited to a handful of environmental regulations that are not extremely stringent, so the result cannot be easily generalized. More research is needed to assess the joint effects of environmental regulations on environmental and economic performance, to explore the heterogeneity of these effects across sectors, countries and types of policies, and to understand which policy designs allow improving environmental quality while not altering the economic performance of regulated businesses.

Keywords: environmental performance; firm performance; microdata sources (search for similar items in EconPapers)
JEL-codes: Q50 Q58 (search for similar items in EconPapers)
Date: 2018-12-06
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env, nep-reg and nep-sbm
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1787/45d269b2-en (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1514-en

Access Statistics for this paper

More papers in OECD Economics Department Working Papers from OECD Publishing Contact information at EDIRC.
Bibliographic data for series maintained by ().