A Comparative Approach of the Environmental Performance between Periods with Positive and Negative Accounting Returns of EEA Companies

Mirela Sichigea,Silviu Carstina,Daniel Circiumaru,Nela-Loredana Caraba-Meita,Marian Ilie Siminica

doi:10.3390/su12187382

Abstract

In recent years, sustainable growth has become an important issue in the business field. Environment, social, and governance (ESG) actions of companies have come to represent key elements in adopting decisions by stakeholders. The question is to what extent they validate the companies’ environmental behaviour, as profitability varies over time. The answer can be obtained by analysing the relationship between environmental performance (EP) and financial performance (FP) of the firms. The paper proposes a new perspective of this relationship, namely, the separate assessment of the EP–FP in the case of positive and negative FP (expressed through accounting returns). A survey on 299 companies in the European Economic Area (EEA), operating in extractives and minerals processing and health care, was conducted. The data were extracted from the Refinitiv database for the period 2009–2018. The findings showed a significant EP–FP correlation in the case of the extractives and minerals processing industry, but their dependency slightly varied on the positive and negative returns’ scenario. As for the healthcare industry, the best result was a moderate correlation between EP and the negative return. Our findings support a managerial design of environmental policy, as well as the future academic research of the EP–FP relationship.

Highlights

The alarming increase of the consequences of climate change around the world has transformed sustainable growth conditions into a strategic issue for any type of human activity that is unfolding [1]
There is a large number of international agreements and regulations [2,3,4,5,6] that attempt to limit the unfavourable impact of companies on the environment, but plenty of work still needs to be done in order to reach a green economy
In order to verify the hypotheses and to obtain solid evidence for the research objective, we applied the research methodology

Summary

Introduction

The alarming increase of the consequences of climate change around the world has transformed sustainable growth conditions into a strategic issue for any type of human activity that is unfolding [1]. The guidelines for sustainable development are globally widespread, different regions of the world have implemented this concept in their own particular way. The European Union (EU) has assumed the ambitious sustainable development goals (SDG), being fully committed to becoming a global leader in implementing the 2030 Agenda [6]. Within the Commission priorities, “The European Green Deal” for a climate-neutral economy represents a challenging and critical point to be implemented at the Member States level. A similar interest in achieving sustainable green growth has been embraced by the countries within the European Economic Area (EEA), namely, Iceland, Liechtenstein, and Norway [9]. Together with the EU Member States, these countries have signed up for economic development without compromising the environment. The priority of green investment and the circular economy has been reinforced in all the European regions in the context of the unprecedented pandemic crisis that Europe is currently facing

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