Abstract

Sustainability initiatives are increasingly important issues that companies are facing. Prior literature has generally found a positive association between firm value and overall sustainability practices. This study specifically examines the unique effects of environmental sustainability initiatives on firm value. Based on a sample of US companies from 2009 to 2016 and utilizing environmental indicators from Sustainalytics, the results indicate mixed effects. Firm value is positively associated with companies that have strong formal environmental policies, strong environmental management systems, and with companies that have initiatives to increase renewable energy use. Conversely, a negative association is found between firm value and external certification of the environmental management system and green procurement policies. Furthermore, no significant association is found between firm value and environmental fines and non-monetary sanctions, participation in the Carbon Disclosure Project, reporting on greenhouse gas emissions, carbon emissions intensity, environmental supply chain incidents, and product and service incidents. These results provide a more nuanced conclusion with respect to the effect of sustainability initiatives in general, and environmental sustainability initiatives in particular, on firm value.