A cross-country comparison of green initiatives, green performance and financial performance

Purpose: The purpose of this paper is to investigate the relationship between green initiatives, green performance, and a firm’s financial performance in the world. The existing literature on environmental initiatives and their impacts is limited to the context of a particular country. This gap points to a lack of clarification of variations in environmental regulation and in economic disparity which may affect the impact of green initiatives on green performance and on financial performance. Design/methodology/approach: Data on the world top 500 publicly traded companies are collected from Compustat, a database of financial, statistical and market information on global companies, and from Newsweek, an information gatekeeper that enables consumers to access a list of environmentally friendly companies. The paper adopts linear regression to test the relationships between variables. Findings: The results show that green initiatives have a positive impact on green performance, which in turn has a positive impact on financial performance. However, the impact of green initiatives varies by country. The study revealed that companies in European countries and Canada lead in the green initiatives and green performance, followed by the USA and Japan. China and Hong Kong lag behind compared to other countries. Research limitations/implications: The small sample size in some of the countries used in this study may impact the validity of the results. Practical implications: This study suggests that companies that seek financial benefits of pursuing green initiatives should have a long-term orientation when implementing these initiatives and should consider the country where they operate. Originality/value: The current study provides a global understanding of the relationship between green initiatives, green performance, and financial performance, and contributes to the literature by highlighting variation among countries and by year.