Sustainability and financial performance: the chicken or the egg dilemma
Sustainability and financial performance: the
chicken or the egg dilemma
There is a clear link betweencorporate sustainability andfinancial results, but whichone is the trigger? Well, thelink can actually run bothways.
Little doubt remains about thecorrelation between improvedsustainability practices and better financial results: Exhibit 1 compiles theresults of close to 160 researchpapers, most of which found a positivecorrelation between these twobenefits. But which one is the trigger?In other words, do better sustainabilitypractices lead to improved financialresults, or does the availability of fundslead to increased investments insustainability? In this article weexplore the issue of causality betweensustainability and financialperformance, and what it means for various stakeholders.The relationship between sustainabilityand financial performance is acomplex one. To begin with, there isnot a standard metric for measuringsustainability, since it covers a broadnumber of socio-economic andenvironmental issues. Financialperformance, although narrower inscope, can also be measured indifferent ways, from share price toprofits. Even after selecting concrete
Exhibit 1 –
Results of 159 studies from 1972 to 2008, analyzing the correlation between