Abstract

Is the natural environment a stakeholder of the firm? And is there a business case for achieving sustainability? The three aspects of stakeholder theory (descriptive, instrumental and normative) lie at the core of the empirical contribution of this study. A sample of 60 of the largest European industrial business groups, extracted from the FTSEuroFirst 300 Index, and an environmental disclosure index inspired by the GRI Guidelines, form the basis for the content analysis of the most recent sustainability reports published before the end of 2008. We find a significant association between contemporaneous environmental performance and disclosure, in that bigger polluters tend to disclose more on their activities, but only to a moderate statistical effect. However, we find no association between environmental performance and financial performance, as well as between environmental disclosure and contemporaneous firm performance. This may suggest two complementary things: firstly, that the relationship between sustainability commitment and financial performance may be so weak that it is barely detectable; and secondly, that cross-sectional studies might fail in capturing a relationship that is normally shaped over longer periods of time.