An Investigation of the Relationship between Environmental and Financial Performance of Organizations

Joseph Sarkis and James Cordeiro

Conference Proceedings of Performance Measurements-Theory and Practice,Cambridge, UK, 1998. pp. 255-262.

The introduction of environmentally conscious business practices into organizations have major operational and strategic implications. The long-term effectiveness of an organization may depend on how well they integrate natural environment concerns into policy and practice. We investigate the relationships of some environmental practices in organizations with their "short-run" performance, using return-on-sales (ROS) as the financial performance measure. Environmental efficiency scores are used to evaluate environmental performance and calculated using data envelopment analysis (DEA). Both pollution prevention and end-of-pipe efficiencies are evaluated in these comparisons. Some preliminary negative relationships are found between the financial and evironmental performance of organizations.


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