There is no discernable tradeoff between operating an “eco-efficient” company and being financially responsible, a new paper says.
The paper, “The Economic Value of Corporate Eco-Efficiency,” won the 2005 Moskowitz Prize, presented annually by the Center for Responsible Business at the Haas School of Business at the University of California at Berkeley for the most outstanding quantitative study of socially responsible investing.
The award includes a $2,500 prize, which will be shared among the papers four authors from the Netherlands: Nadja Guenster, Jeroen Derwall and Kees Koedijk, of Erasmus University, and Rob Bauer of Maastricht University.
The study found that the stock market confers a higher value to companies that operate in an environmentally-friendly manner, the paper says.
While environmentally-responsible companies do not have higher returns on assets than average, companies with poor environmental performance perform less well than their counterparts.
This suggests that managers do not face a tradeoff between environmental responsibility and financial performance, the paper says.
That finding means that investors invest in eco-friendly companies without jeopardizing their investments.