A review paper related to the various variable’s measurements on the relationship between environmental performance and financial performance

Abstract

The present-day environmental concerns have provided an incentive for firms to reduce environmental pollution by the reduction in resource consumption which in turn reduces the carbon emissions and other pollutants. To achieve the stakeholder requirement, the firm needs to improve the environmental management system, utilize environmentally friendly activities and strategies for efficient utilization of materials. Different results (positive, negative, no influence) have been documented in previous articles. This study focusses on the measurement of variables and the result of these papers. An inconsistent result has been found between Corporate Environmental Performance (CEP) and Corporate Financial Performance (CFP) relationship, for a sample of 63 empirical studies. In general, environmental performance is positively related to corporate financial performance. The result indicates the variety of environmental variables influencing the results. It is demonstrating that financial benefits (both accounting-based, market-based and others) are more from environmental management and environmental pollution than environmental disclosure. But there is no obvious evidence to demonstrate different financial variables can lead to different correlations.