Corporate Environmental Performance and Shareholder Value

The role corporations should play in achieving social objectives is a topic with a lengthy history of debate. Significant recent interest has focused on the impact corporate activities have upon the natural world and the environment. This paper examines the link between corporate environmental responsibility--measured by environmental reputation indices--and shareholder
wealth. Investors in a portfolio of firms enjoying above-average reputations for corporate environmental responsibility earn risk-adjusted returns significantly greater than either the overall market or portfolios composed of less environmentally-responsible firms. These results are supported by preliminary evidence concerning the value of adopting the CERES Principles, a formal
code of corporate environmental responsibility.

White, Mark. "Corporate Environmental Performance and Shareholder Value." University of Virginia Online Scholarship Initiative (1996).

Originally published at http://etext.lib.virginia.edu/osi/