An Impact of Environmental Practices on Financial Performance: A Literature Review

29 Pages Posted: 6 Dec 2015

See all articles by L. F. D. Z. Gunathilaka

L. F. D. Z. Gunathilaka

University of Sri Jayewardenepura

Kennedy Gunawardana

University of Sri Jayewardenepura

M. D. Pushpakumari

University of Sri Jayewardenepura

Date Written: December 7, 2015

Abstract

In the course of developing interest in environmental management practices within the organization, many companies world over now focus attention towards environmental sustainability. The purpose of this paper is to carry out a literature review of the quantitative and qualitative studies that analyzes the relationship between environmental practices and the resultant impact on financial performance. An examination of the literature was undertaken to review the quantitative and qualitative studies. A total of 130 studies were identified and examined the sample size, financial variables, environmental variables, statistical methods and also the main findings of the researchers. Results were mixed and varied, ranging from positive to negative and in some cases with no result, inconsistent, often contradictory and statistically insignificant in relationship. Findings suggested that 52% studies of selected sample show positive relations and the rest 48% still remaining with negative mix or no relationship. The inconsistency is due to the absence of clear framework that explains what actually constitutes environmental practices and how to determine their outcome, measures of financial performance, sample composition, time period and control variable. Consequently, it is more difficult to identify general relationship between different indicators of environment and financial performance. The paper offers interesting implications for managers, pointing out that a real commitment to green management may result in a positive influence on financial performance. Therefore it is critical to build a scope for future research to achieve better and more consistent results.

Keywords: Financial performance, Environmental practices, Qualitative studies, Quantitative studies

JEL Classification: G30

Suggested Citation

Gunathilaka, L. F. D. Z. and Gunawardana, Kennedy and Pushpakumari, M. D., An Impact of Environmental Practices on Financial Performance: A Literature Review (December 7, 2015). 12th International Conference on Business Management (ICBM) 2015. Available at SSRN: https://ssrn.com/abstract=2699776 or http://dx.doi.org/10.2139/ssrn.2699776

L. F. D. Z. Gunathilaka (Contact Author)

University of Sri Jayewardenepura ( email )

Nugegoda
Gandodawila
Gangodawila, Nugegoda 10250
Sri Lanka

Kennedy Gunawardana

University of Sri Jayewardenepura ( email )

Nugegoda
Gandodawila
Gangodawila, Nugegoda 10250
Sri Lanka

M. D. Pushpakumari

University of Sri Jayewardenepura ( email )

Nugegoda
Gandodawila
Gangodawila, Nugegoda 10250
Sri Lanka

Register to save articles to
your library

Register

Paper statistics

Downloads
151
Abstract Views
737
rank
193,377
PlumX Metrics