Sustainability Practices and Corporate Financial Performance: A Study Based on the Top Global Corporations

J. Bus Ethics (2012) 108:61-79, DOI 10.1007/s10551-011-1063-y

19 Pages Posted: 15 Oct 2012

See all articles by Rashid Ameer

Rashid Ameer

IPU New Zealand Tertairy Institute

Radiah Othman

Massey University

Date Written: October 15, 2012

Abstract

Sustainability is concerned with the impact of present actions on the ecosystems, societies, and environments of the future. Such concerns should be reflected in the strategic planning of sustainable corporations. Strategic intentions of this nature are operationalized through the adoption of a long-term focus and a more inclusive set of responsibilities focusing on ethical practices, employees, environment, and customers. A central hypothesis, that we test in this paper is that companies which attend to this set of responsibilities under the term superior sustainable practices, have higher financial performance compared to those that do not engage in such practices. The target population of this study consists of the top 100 sustainable global companies in 2008 which have been selected from a universe of 3,000 firms from the developed countries and emerging markets. We find significant higher mean sales growth, return on assets, profit before taxation, and cash flows from operations in some activity sectors of the sample companies compared to the control companies over the period of 2006-2010. Furthermore, our findings show that the higher financial performance of sustainable companies has increased and been sustained over the sample. Notwithstanding sample limitation, causal evidence reported in this paper suggests that, there is bi-directional relationship between corporate social responsibilities practices and corporate financial performance.

Keywords: Environment, Ethics, Diversity

Suggested Citation

Ameer, Rashid and Othman, Radiah, Sustainability Practices and Corporate Financial Performance: A Study Based on the Top Global Corporations (October 15, 2012). J. Bus Ethics (2012) 108:61-79, DOI 10.1007/s10551-011-1063-y, Available at SSRN: https://ssrn.com/abstract=2162195

Rashid Ameer

IPU New Zealand Tertairy Institute ( email )

57 Aokautere Drive
Fitzherbert
Palmerston north
New Zealand

Radiah Othman (Contact Author)

Massey University ( email )

School of Accountancy
Palmerston North
New Zealand

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