explained the concept of environmental technologies, and the practical application of
these technologies was illustrated using a mini case example of 3M Corporation.
Hutchinson (1996) analyzed the integration of environmental policy with business
strategy studying several firms (Procter and Gamble, Rank Xerox and The Cooperative
Bank). Marcus and Geffen (1998) studied the processes by which distinctive
competencies are acquired based on the case of pollution prevention in electric
generation. Enz and Siguaw (1999) examined four hotels that agreed that cost savings,
operating efficiencies and excellent marketing opportunities derived from their
environmental initiatives.
Along with these qualitative studies, statistical methods have been used to analyze
the linkage between environmental management and financial performance. This
article focuses on these quantitative studies, and they are presented and examined in
the next sections.
3. Methodology
A literature review is made in order to identify quantitative studies about the link
between environmental variables and financial performance. A computer search of the
ABI Inform, Emerald and Science Direct databases was conducted. The search was
carried out until 2008.
The computer search was made for works that related the expressions
environmental management, environmental performance, ISO 14000 or ISO 14001 to
financial performance, results or profitability in the title of the paper. The list of
references given in seminal papers was also reviewed. Theoretical papers and those
based on anecdotal evidence or case studies were eliminated. A similar search strategy
was carried out in Orlitzky et al.’s (2003) article about the relationship between
corporate social performance and financial performance.
4. Results
A total of 32 studies that analyzed the impact of the environment on financial
performance were identified. Table I shows these studies. This table includes only
works that use some measure of financial performance, along with environmental
management variables and/or environmental performance variables.
Table I shows that the set of firms, industries and countries are varied.
Manufacturing sectors and US firms have been the most common. Besides, few studies
have analyzed just one industry.
With regard to environmental variables, we have distinguished between
environmental management variables and environmental performance variables.
Environmental management encompasses the technical and organizational activities
undertaken by the firm for the purpose of reducing environmental impacts and
minimizing their effects on the natural environment (Cramer, 1998). The output of
environmental management is environmental performance, which refers to the effects
of the firm’s activities and products on the natural environment (for example,
consumption of resources or generation of waste and emissions) (Klassen and
Whybark, 1999). Only six studies (18.8 percent) used both environmental management
variables and environmental performance variables, 14 studies (43.7 percent) used only
environmental management variables, and the remaining 12 articles (37.5 percent)
used only environmental performance variables. Therefore, 20 studies (62.5 percent)