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Corporate Environmental and Economic Performance of Japanese Manufacturing Firms: Empirical Study for Sustainable Development
Author(s) -
Fujii Hidemichi,
Iwata Kazuyuki,
Kaneko Shinji,
Managi Shunsuke
Publication year - 2013
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.1747
Subject(s) - return on assets , business , environmental scanning , sustainable development , sustainability , manufacturing sector , industrial organization , natural resource economics , economics , environmental management system , finance , profitability index , ecology , labour economics , irrigation , biology
This study examines the relationship between environmental performance and economic performance in Japanese manufacturing firms. The environmental performance indicators include CO 2 emissions and the aggregate toxic risk associated with chemical emissions relative to sales. Return on assets (ROA) is used as an indicator of economic performance. We demonstrate that there is a significant inverted U‐shaped relationship between ROA and environmental performance calculated by aggregated toxic risk. We also find that the environmental performance increases ROA through both returns on sales and improved capital turnover. However, we observe a significant positive relationship between financial performance and environmental performance based on CO 2 emissions. These findings may provide evidence for the consequences of firms' environmental behavior and sustainable development. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.