An Analysis of Corporate Sustainability Behaviour Through the Lens of Empirical Fitness Landscapes

Abstract

Identifying the type of corporate environmental actions that are most effective in aligning firms' economic interests with broader environmental needs is a crucial challenge in sustainable business practice research. In this manuscript, we use a novel sustainability behavioural dataset to derive an empirical approach that systematically characterises the relationship between environmental actions, or sustainability behaviour, and firms’ environmental and financial performance. Our approach is based on the idea that the behaviour-performance mapping provides an empirical sustainability fitness landscape. We analyse the characteristics of the landscape and the optimal behaviours in local peaks. We find that the divergence of observed sustainability behaviours from their local optimal counterpart is concentrated in a few behavioural dimensions. Most notably, we find a significant over-investment in changes in current assets and under-investment in actions that create growth opportunities. Overall, our approach provides an empirical framework to study how changes in corporate sustainability behaviour can contribute to sustainable development.

Keywords: Sustainability behaviour, Fitness landscape, Genetic algorithm, Sustainable development

JEL Classification: C10, C80, Q5