The influence of ISO 14000 on firm performance

Maintaining stability while boosting growth? The long-term impact of environmental accreditations on firms' financial risk and sales growth

Purpose

In this research, we examine the impact of ISO 14001, an international environmental management accreditation, on the long-term financial risk and sales growth of firms.

Design/methodology/approach

We employ a quasi-experimental design and construct 682 treated and control firms that are matched using propensity score matching. We then test our hypotheses using the difference in difference model.

Findings

We find that, although ISO 14001 leads to lower financial risk, standard management systems such as ISO 14001 actually hinder the sales growth of firms, an unanticipated outcome. In particular, this trade-off worsens over time, becoming particularly more severe among firms that adopt ISO 14001 early and operate in less-polluting industries.

Research limitations/implications

We present a hidden side of environmental accreditations, indicating a potential trade-off in the long-term efficacy of environmental standard management systems.

Practical implications

Firms must be cautious about adopting environmental management systems. Over time, a focus on environmental certification could potentially hinder firms' long-term growth. Firms should also be aware of certification timing and levels of industry pollution to resolve the tension in the trade-off.

Originality/value

This research is one of the first studies demonstrating that environmental accreditations result in a trade-off between reducing financial risk and improving sales growth.

The impact of ISO 26000 social responsibility standard adoption on firm financial performance

Purpose

The purpose of this paper is to investigate the relationship between the ISO 26000 (global corporate social responsibility standard) adoption and financial performance. The current study aims to explore whether ISO 26000 social responsibility standard adoption has an impact on financial performance.

Design/methodology/approach

The study is based on a sample consisting of French companies listed on the CAC-All-Tradable index for the period 2010-2017. This study is motivated by using panel data estimated feasible generalized least squares method.

Findings

The results show that that good corporate governance can improve the financial performance. This positive impact is also noticed in the case of labor relations and conditions, environment and community involvement. However, it does not apply to human rights, fair operating practices and consumer issues, as there is no significant relationship between these dimensions and the financial performance.

Practical implications

The findings may be of interest to the academic researchers, investors and regulators. For academic researchers, it is interested in discovering how the adoption of ISO 26000 can improve financial performance. For investors, the results show that it is appropriate for different countries to adopt the ISO 26000 guidelines and introduce societal practices in their activities.

Originality/value

This paper extends the existing literature by examining the effect of the ISO 26000 standard for financial performance in the French context. The study of corporate social responsibility through its seven societal dimensions has enabled us to understand the guidelines relating to the ISO 26000 standard.

Industry 4.0 and Sustainability Implications: A Scenario-Based Analysis of the Impacts and Challenges

The new evolution of the production and industrial process called Industry 4.0, and its related technologies such as the Internet of Things, big data analytics, and cyber–physical systems, among others, still have an unknown potential impact on sustainability and the environment. In this paper, we conduct a literature-based analysis to discuss the sustainability impact and challenges of Industry 4.0 from four different scenarios: deployment, operation and technologies, integration and compliance with the sustainable development goals, and long-run scenarios. From these scenarios, our analysis resulted in positive or negative impacts related to the basic production inputs and outputs flows: raw material, energy and information consumption and product and waste disposal. As the main results, we identified both positive and negative expected impacts, with some predominance of positives that can be considered positive secondary effects derived from Industry 4.0 activities. However, only through integrating Industry 4.0 with the sustainable development goals in an eco-innovation platform, can it really ensure environmental performance. It is expected that this work can contribute to helping stakeholders, practitioners and governments to advance solutions to deal with the outcomes emerging through the massive adoption of those technologies, as well as supporting the expected positive impacts through policies and financial initiatives.

The effect of carbon performance on corporate financial performance in a growing economy

Purpose

This study aims to examine the impact of carbon performance on firm financial performance by using Republic of South Africa CDP company data from 2014 to 2015.

Design/methodology/approach

The study considered 63 companies on the Republic of South Africa CDP database. Content analysis was used to extract both carbon performance data and firm financial data. The data were analysed using panel data analysis and partial derivative approaches.

Findings

The findings indicate that carbon performance produces a positive relationship with return on equity (ROE) and return on sales (ROS). Conversely, it generates a negative relationship with return on investment (ROI) and market value added (MVA). Furthermore, the study highlights that carbon performance pays and that the relationship with financial performance (ROE, ROS, ROI and MVA) deepens as the corporate growth rate increases.

Practical implications

Companies that integrate carbon performance initiatives reap substantial financial gains, and this relationship is strengthened as the company’s growth rate increases.

Originality/value

The research questions and data collected from Republic of South African CDP firms are original and provide important evidence on the impact of carbon performance on firm financial indicators. Furthermore, many empirical studies focus on highly industrialised countries; this study examines this issue in the emerging South African economy which has experienced rapid growth of emissions in recent years. While most previous studies on the relationship between carbon performance and firm financial performance used a single class of corporate financial measures, this study used both accounting- and market-based indicators. It also investigated how firm growth moderates the association between carbon performance and diverse financial performance measures. Finally, pressure exerted by green stakeholders since the introduction of the Johannesburg Stock Exchange’s sustainability criteria in 2004, as well as government policies, has a profound impact on the South African business context; it is hence important to examine corporate environmental management activities in the context of the association between carbon performance and firm performance.

Do ISO standards favour logistics provider efficiency, competitiveness and sustainability? A Slovenian perspective

Purpose

– The purpose of this paper is to investigate the prevalence of the application of standards and their positive influence on the efficiency and competitiveness of Slovenian logistics service providers. Moreover, an analysis was also done on the relationship between the adoption of the environmental standard and greater concern for the environment.

Design/methodology/approach

– A small sample analysis was done using a combination of statistical methods and an abductive approach. A χ2 analysis was utilized to test the hypotheses.

Findings

– Many benefits were indicated. However, a positive relationship between quality standards and efficiency, as well as competitiveness, was not confirmed. In addition, the implementation of ISO 14001 quality standards was found to have no effect on the higher investment in environmental protection.

Research limitations/implications

– This study is limited by its local aspect (Slovenia), small sample size and its focus on just quality standards and their external factors. Future studies should be extended to the countries of eastern Europe and should further examine the relationship of internal factors as well as the relationship between the adoption of quality standards and the supply chain.

Practical implications

– A survey is essential not just for the Slovenian industry but also for the wider logistics industry as well as for government authorities and standards providers.

Originality/value

– This is one of the first papers written to analyse the effects of quality standards on international logistics service providers and the first paper that has explored the impact of standards on Slovenian logistics service providers.

Does It Pay to Be Green? Financial Benefits of Environmental Labeling among Chinese Firms, 2000–2005

Drawing on economic, sociological, and strategic perspectives, we use data of a large sample of 936 Chinese manufacturing firms in the period from 2000 to 2005 to examine how environmental labeling may affect a firm's financial performance. We argue that reducing information asymmetry, increasing legitimacy, and differentiating strategically through environmental labeling may prompt customers to patronize the firm, thereby enhancing firm performance. However, not all firms benefit equally; environmental labeling conveys fewer benefits for larger firms and for firms listed in a stock market, because they are less threatened by information asymmetry or insufficient organizational legitimacy. Our findings suggest that environmental labeling has generally limited influence on financial performance, but for small and unlisted firms, environmental labeling increases sales.