An empirical evaluation of environmental efficiencies and firm performance: Pollution prevention versus end-of-pipe practice

Abstract

Environmental advocates maintain that waste minimization, recycling, remanufacturing and other environmental practices will greatly enhance the “bottom-line” for organizations. We investigate the differential relationships between (separately) pollution prevention and end-of-pipe efficiencies with short-run financial performance (measured using return on sales (ROS)). After controlling for both firm size and financial leverage, we find that for 482 US firms in 1992, pollution prevention and end-of-pipe efficiencies are both negatively related to ROS, and that this negative relationship is larger and more significant for pollution prevention efficiencies.