NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Impact of Corporate Sustainability on Organizational Processes and Performance

Robert G. Eccles, Ioannis Ioannou, George Serafeim

NBER Working Paper No. 17950
Issued in March 2012
NBER Program(s):   CF

We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 US companies, we find that corporations that voluntarily adopted sustainability policies by 1993 - termed as High Sustainability companies - exhibit by 2009 distinct organizational processes compared to a matched sample of companies that adopted almost none of these policies - termed as Low Sustainability companies. The boards of directors of High Sustainability companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics. High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.

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This paper was revised on April 17, 2014

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Document Object Identifier (DOI): 10.3386/w17950

Forthcoming: The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance, Robert G. Eccles, Ioannis Ioannou, George Serafeim. in Causes and Consequences of Corporate Culture, Zingales and Poterba. 2014

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