Do Green Practices result in better financial performance?

Abstract

The model of economic progress we have adopted is based on exploitation of natural resources and generation of effluents causing immense damage to the natural environment. Considering detrimental impact of deteriorating ecological balance on the life on earth, it becomes imperative to safeguard our environmentby adopting“green”business practices which minimizes such impact. “Green” practices refer to best practice environmental and carbon management, and sustainability practices. General perception about green practices is related high cost of adoption, long gestation periods, and resultant high prices of products and services; preventing businesses to voluntarily adopt green practices.It is observed that this perception is fading and several companies have adopted green practices. This paper attempts to study such companies in terms of impact of green practices (Energy Efficiency, Waste Management, Water Management and Green Building Practices) on their business and financial performance, stability, profitability and growth. It explores “Going Green” as a viable, long-term business strategy. Green Economy India, a consulting organization in the area of green development, education, entrepreneurship and training; has provided a list of Indian organisations which have adopted practices in India. The list includes 39 private sector companies which have been taken up for further exploration and study. The study comprises analysis of market and financial performance of these companies since the adoption of green practices or during last 10 years. The study indicates that contrary to general belief, most of these companies have sustained or improved their financial performance; there seems to be no negative impact of green practices. On the contrary, the green practices have helped these companies to improve their public image, and helped in achieving improved performance.