The Impact of Corporate Sustainability on Organizational Processes and Performance

37 Pages Posted: 31 Mar 2012

See all articles by Robert G. Eccles

Robert G. Eccles

University of Oxford - Said Business School

Ioannis Ioannou

London Business School - Department of Strategic & International Management

George Serafeim

Harvard University - Harvard Business School

Multiple version iconThere are 2 versions of this paper

Date Written: March 2012

Abstract

We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 US companies, we find that corporations that voluntarily adopted sustainability policies by 1993 - termed as High Sustainability companies - exhibit by 2009 distinct organizational processes compared to a matched sample of companies that adopted almost none of these policies - termed as Low Sustainability companies. The boards of directors of High Sustainability companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics. High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.

Suggested Citation

Eccles, Robert G. and Ioannou, Ioannis and Serafeim, George, The Impact of Corporate Sustainability on Organizational Processes and Performance (March 2012). NBER Working Paper No. w17950. Available at SSRN: https://ssrn.com/abstract=2031958

Robert G. Eccles (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Ioannis Ioannou

London Business School - Department of Strategic & International Management ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
02070008748 (Phone)

HOME PAGE: http://www.ioannou.us

George Serafeim

Harvard University - Harvard Business School ( email )

381 Morgan Hall
Boston, MA 02163
United States

HOME PAGE: http://goo.gl/q4cJ5A

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