The Financial Impact of ISO 14001 Certification: Top-Line, Bottom-Line, or Both?

Pieter de Jong, Antony Paulraj, Constantin Blome

Research output: Journal PublicationArticlepeer-review

73 Citations (Scopus)

Abstract

It is not easy being green, but it does beg the question: Does being green pay off on the bottom-line? Unfortunately, that question of becoming ISO 14001 to reap financial benefit remains widely unanswered. In particular, corporate practice is interested in how environmental management impacts firms' finance through top-line impact, bottom-line impact, or both-as this paves the way for an investment of environmental management. As current findings are mixed, our study tracks financial performance of publicly traded US firms between 1996 and 2005 to test whether ISO 14001 leads to improved financial performance. Employing a rigorous event-study approach, we compare certified firms to different control groups based on several matching criteria that include industry, size, and/or ROA. In the short run, ISO 14001 certification makes only a minor impact on the bottom-line, according to our results. However, these same results show a significant financial improvement over the long haul with ISO 14001 certification. Additionally, this long-term improvement also makes a significant improvement in top-line performance. Thus, we conclude that environmental management pays off along both dimensions.

Original languageEnglish
Pages (from-to)131-149
Number of pages19
JournalJournal of Business Ethics
Volume119
Issue number1
DOIs
Publication statusPublished - Jan 2014
Externally publishedYes

Keywords

  • Bottom-line impact
  • Environmental management systems
  • Event study
  • Financial performance
  • ISO 14001
  • Top-line impact

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting (all)
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Law

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