Corporate Sustainability

AB0001 S2-2014/15

Sustainability: Issues, Reporting and Finance

Team Project: Corporate Sustainability and Company Performance

The word Sustainability has become a common vocabulary over the past decades. The concept was initially launched as an environmental idea focused on the conservation of resources. At present it has become a milestone for the entire business community. Besides company profitability, a sustainable company has to take care of the interest of multiple stakeholders, including government, consumers, employees, investors, communities and public at large. In order to turn corporate sustainability into above-average profitability, the concept must become a matter of corporate management and core business strategy. A window dressing and publicity approach in sustainability will not provide long-term profitability and may lead to market share decline and the loss of company reputation.

Despite increasing emphasis on corporate sustainability (CS) and corporate social responsibility (CSR) in the business world, studies indicated that their costs and benefit to companies are still inconclusive. For example, Boyle et al. (1997) suggested that CSR activities may adversely affect financial results. In a survey conducted by Margolis and Walsh, 2003, no consensus has emerged so far on whether CSR leads to superior financial performance. Nakao et al. (2007) found that a company’s environmental performance has a positive impact on its financial performance and vice versa. In Margolis and Elfenbien (2008) survey of management literature, they found that there is little evidence stating that CSR negatively affects performance. In 2010, Baruch et al. determined that charitable contributions are significantly associated with future revenue, whereas reverse casualty is marginally significant.

Hence, many scholars still consider that much research needs to be conducted before the relationship between CSR and company performance can be fully...