The economic value of corporate eco-efficiency

N. Guenster, R. Bauer, J.M.M. Derwall, C.G. Koedijk

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This study adds new insights to the long-running corporate environmental-financial performance debate by focusing on the concept of eco-efficiency. Using a new database of eco-efficiency scores, we analyse the relation between eco-efficiency and financial performance from 1997 to 2004. We report that eco-efficiency relates positively to operating performance and market value. Moreover, our results suggest that the market's valuation of environmental performance has been time variant, which may indicate that the market incorporates environmental information with a drift. Although environmental leaders initially did not sell at a premium relative to laggards, the valuation differential increased significantly over time. Our results have implications for company managers, who evidently do not have to overcome a tradeoff between eco-efficiency and financial performance, and for investors, who can exploit environmental information for investment decisions.
Original languageEnglish
Pages (from-to)679-704
JournalEuropean Financial Management
Volume17
Issue number4
DOIs
Publication statusPublished - 2011

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Eco-efficiency
Economic value
Financial performance
Environmental information
Market value
Investment decision
Investors
Managers
Data base
Environmental performance
Trade-offs
Operating performance
Premium
Market valuation

Cite this

Guenster, N. ; Bauer, R. ; Derwall, J.M.M. ; Koedijk, C.G. / The economic value of corporate eco-efficiency. In: European Financial Management. 2011 ; Vol. 17, No. 4. pp. 679-704.
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The economic value of corporate eco-efficiency. / Guenster, N.; Bauer, R.; Derwall, J.M.M.; Koedijk, C.G.

In: European Financial Management, Vol. 17, No. 4, 2011, p. 679-704.

Research output: Contribution to journalArticleScientificpeer-review

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