Environmental Proactivism and Firm Performance: Evidence from Industry Analyst Forecasts

James Cordeiro and Joseph Sarkis

Business Strategy and the Environment, Vol. 6, No. 2, pp. 104-114, 1997.

Stakeholders have been putting pressures on organizations to be competitive and yet remain environmentally benign. These pressures have caused many firms to adopt proactive stances in trying to achieve these and other goals. In this paper, we further investigate the relationship between firm-level environmental proactivism and financial performance. Using the toxic releases inventory (TRI) data we take a sample of 523 firms from the year 1992 and determine the relationships between these two factors. We find that there is significant negative relationships between firm performance, as measured by industry analyst 1- and 5-year earnings-per-share performance forecasts and environmental proactivism. We present a discussion in this paper that will help identify possible causes for this type of relationship.

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