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The relationship between sustainability practices and financial performance of construction companies

The relationship between sustainability practices and financial performance of construction... Purpose Over recent years, a number of companies have committed to sharing information relating to their environmental, social and governance ESG activities, in response to a higher demand for transparency from stakeholders. This paper aims to explore the impact of such reporting on the financial performance of construction companies.Designmethodologyapproach This paper first examines the state of nonfinancial reporting of publiclylisted construction companies on climate change, environmental management, environmental efficiency, health and safety, human capital, conduct, stakeholder engagement, governance and other matters deemed to be of concern to institutional investors. It then presents the results of an empirical study on the impact of issuing nonfinancial reports and the extent of companies sustainability practices represented by ESG scores on the financial performance of the companies. Financial performance is measured via a range of financial ratios.Findings The paper finds that a majority of the publiclylisted construction companies studied have low levels of reporting, while construction companies issuing nonfinancial reports largely outperform those which do not in a number of selected financial ratios, although the correlation between financial performance and ESG scores is not strong.Originalityvalue The originality of this research lies in its use of hard data, and it is supported by a wide range of financial ratios this is distinguished from the existing, largely qualitative literature. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Smart and Sustainable Built Environment Market Emerald Publishing

The relationship between sustainability practices and financial performance of construction companies

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References (40)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2046-6099
DOI
10.1108/20466091311325827
Publisher site
See Article on Publisher Site

Abstract

Purpose Over recent years, a number of companies have committed to sharing information relating to their environmental, social and governance ESG activities, in response to a higher demand for transparency from stakeholders. This paper aims to explore the impact of such reporting on the financial performance of construction companies.Designmethodologyapproach This paper first examines the state of nonfinancial reporting of publiclylisted construction companies on climate change, environmental management, environmental efficiency, health and safety, human capital, conduct, stakeholder engagement, governance and other matters deemed to be of concern to institutional investors. It then presents the results of an empirical study on the impact of issuing nonfinancial reports and the extent of companies sustainability practices represented by ESG scores on the financial performance of the companies. Financial performance is measured via a range of financial ratios.Findings The paper finds that a majority of the publiclylisted construction companies studied have low levels of reporting, while construction companies issuing nonfinancial reports largely outperform those which do not in a number of selected financial ratios, although the correlation between financial performance and ESG scores is not strong.Originalityvalue The originality of this research lies in its use of hard data, and it is supported by a wide range of financial ratios this is distinguished from the existing, largely qualitative literature.

Journal

Smart and Sustainable Built Environment Market – Emerald Publishing

Published: May 24, 2013

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