The Economic Value of Corporate Eco-Efficiency

Researchers from the Rotterdam School of Management and Maastricht University recently presented an interesting paper at the 2005 Academy of Management Conference.  The paper focuses on the concept of eco-efficiency as it relates to financial performace.  They claim there is a clear discrepancy in operating performance between firms with high eco-efficiency ratings and those with low ratings.  They report that "environmental leaders do not have a return on assets superior to that of the control group, but laggards display significant operational underperformance".  

Basically, they find that eco-efficiency and financial performance are linked.  

You ask, “What does this have to do with environmental management as we professionals practice it today?” Everything! For years we environmental professionals have struggled to justify our existence. We have to beg, borrow, and steal to get people and tools to help us better manage environmental compliance and performance.

If these researchers are correct, then perhaps as companies take notice that environmental performance does matter to the financial markets (see blog dated January 6 on Greenhouse Gasses), they will make a more deliberate and concerted effort to resource the environmental function. Boards of directors will demand better eco-efficiency from management, and hopefully, that will motivate management to fulfill the environmental professionals request for labor and capital to achieve those high levels.

Read more about cost-effective environmental compliance tools.

by
Doug Hatler, CHMM
DHatler@enviance.com