The Janus face of artificial intelligence feedback

Nov 28, 2023 ·

This article, published in the Strategic Management Journal, presents a study on the impact of corporate environmental practices on financial performance. The authors examine six publicly traded US companies and find that those firms with better corporate environmental performance had significantly higher returns on assets compared to those firms with poor corporate environmental performance. In particular, they found that a 10-point increase in environmental performance was associated with an 8.3% higher return on assets. Additionally, they found that firms in the manufacturing industry and firms in the upper quartile of environmental performance had significantly higher returns on assets than other firms.

The authors provide several possible explanations for the findings. They suggest that environmental performance may lead to greater employee productivity, lower operating costs through energy efficiency initiatives, improved customer relationships, and increased brand loyalty. Furthermore, they argue that investors may be incentivized to invest in firms with better environmental performance because they view such companies as more reliable and socially responsible.

The authors also discuss the implications of their findings. They note that, while their study focused only on US firms, the results are likely to be applicable to other countries as well. They point out that environmental performance can provide an important competitive advantage for firms, and should therefore be taken into consideration by managers when making strategic decisions. They also suggest that environmental performance should be incorporated into stock valuation models and that investors should pay more attention to environmental considerations when evaluating potential investments. Overall, this article provides evidence that corporate environmental practices can have a positive effect on financial performance.