Improving the Efficiency of Firm’s Environmental Strategy Through Environmentally Oriented Corporate

Abstract

This study analyzes how corporate governance drives greener company performances by motivating and monitoring managers’ actions in conducting company’s environmental strategy. By testing 600 companies listed in the U.S. Newsweek 500 during 2012-2014, this study found that firms could rely on a group of corporate governance controls that specifically target managers’ incentives and efforts associated with environmental strategy (i.e., linking managers’ compensation with environmental productivities, establishing a sustainability-oriented committee, and deploying third-party auditors for environmental metrics reports) to promote multidimensional environmental performances (i.e., energy, water and waste productivities). Then, these manager-driven environmental performances would positively influence both financial and nonfinancial performance.