Stock Market Returns of Leading Green Companies of USA in Comparison with Their Benchmark Indices

3rd International Conference on Integrating Spirituality and Organizational Leadership, Haridwar, conducted by IIT Roorkee, Gurukula Kangri Vishwavidyalaya and ISOL Foundation, February 1-5, 2011

7 Pages Posted: 20 Feb 2013 Last revised: 21 Feb 2013

See all articles by Ajith Sankar R.N.

Ajith Sankar R.N.

affiliation not provided to SSRN

Vaishnavi Krishnan

PSG College of Technology - PSG Institute of Management

Date Written: January 19, 2011

Abstract

Companies are increasingly finding innovative ways to do business in a sustainable manner. These corporations are responding to their own needs to run a conscience-driven business and also the needs of consumers who are looking forward to buy products and services that are friendly to the natural environment. A concern among companies and investors that wanted to go green was whether it will affect the competitiveness of the company and its stock market returns. This paper sets out to assess whether companies engaged in green practices has lower than average stock market returns. An empirical study was carried out using a simple research tool, percentage analysis. The study measured stock market returns over various time frames for leading companies that are ecology friendly, and it was compared with the stock market returns of leading benchmark indices. Rankings generated by an independent body, the Newsweek magazine’s Green Rankings, was used during the study. Certain preliminary conclusions are derived. The research led to the suggestion that the stock market returns of companies engaged in green practices are higher than the broad market returns. The study was limited to companies listed in US stock exchanges. The study only used the first list released by Newsweek - Newsweek Green Ranking 2009. The study may give hope and confidence to individuals and firms that engaging in green practices may help to improve the purpose of their existence. This study may break the long-held belief that doing good to the society by going green does not make good business sense. In a context where matching the returns provided by the broad market index itself is considered an achievement by the investors, an out-performance signals that being ecologically sustainable need not mean lesser returns to investors. Fund management firms may look into investing in firms that are only green. Individuals may consider investment in environment-friendly companies as a safer option for investment. Firms may look into improving their focus on green practices.

Keywords: Newsweek Green Ranking, Stock Market Returns, ESG, Corporate Social Responsibility, Leadership Consciousness, Spirituality, Triple Bottom Line, Trucost, Environmental Impact, Green Policies, Dow Jones Industrials, S&P 500, NYSE Composite, NASDAQ, Russell 3000

Suggested Citation

Sankar R.N., Ajith and Krishnan, Vaishnavi, Stock Market Returns of Leading Green Companies of USA in Comparison with Their Benchmark Indices (January 19, 2011). 3rd International Conference on Integrating Spirituality and Organizational Leadership, Haridwar, conducted by IIT Roorkee, Gurukula Kangri Vishwavidyalaya and ISOL Foundation, February 1-5, 2011, Available at SSRN: https://ssrn.com/abstract=2220595

Ajith Sankar R.N. (Contact Author)

affiliation not provided to SSRN

Vaishnavi Krishnan

PSG College of Technology - PSG Institute of Management ( email )

Coimbatore, Tamil Nadu 641004
India

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
93
Abstract Views
381
rank
311,717
PlumX Metrics