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  • Thumbnail for ENVIRONMENTAL PERFORMANCE AND ITS EFFECT ON FINANCIAL PERFORMANCE: A STUDY OF COMPANIES IN DEVELOPED AND TRANSITIONING ECONOMIES OF THE EUROPEAN UNION
    ENVIRONMENTAL PERFORMANCE AND ITS EFFECT ON FINANCIAL PERFORMANCE: A STUDY OF COMPANIES IN DEVELOPED AND TRANSITIONING ECONOMIES OF THE EUROPEAN UNION by Sukdolakova, Katerina

    The decision to pursue environmental strategies on a company level often carries financial considerations. This paper develops a regression model to examine the relationship and possible differences between financial and environmental performance of companies in western and eastern EU countries. Environmental performance is assessed through a combination of quantitative and qualitative measures focusing on both emission levels and company policies on bettering environmental performance. Financial performance is represented by profit margin. The paper concludes that improvements in company environmental performance lead to better financial performance. Decrease in carbon intensity, presence of a policy of emission reduction, and use of sustainable criteria in the selection of suppliers and trading partners are variables that positively impact financial performance. No difference was found in the sample between eastern and western EU companies or in the strength of the effect of environmental improvements on financial performance.