Causal Relationship between Environmental and Financial Indicators of Russian Industrial Companies

The high level of negative impact on the environment and the deterioration of its quality necessitate the greening of production and economic activities. The purpose of this study was to determine the direction and degree of the causal relationship between the environmental and financial indicators of Russian industrial companies. Taking into account the lack of a systematic study of the relationship between the level of environmental responsibility of Russian companies and their financial condition, as well as only single works analyzing all possible types of causation of corporate indicators, the stated goal looks relevant and significant. The research methodology assumed the use of applied statistics methods. In the course of the work, the direction and strength of the correlation were determined for different periods of time both between individual environmental and financial indicators, as well as for their aggregation. It was shown that the predominantly financial interests of Russian industrial companies and public env ironmental interests are weakly but positively interrelated, except for such objects as air pollution and waste. It is concluded that there is an institutional trap in the stock mark et that prevents an effective transition to a green economy. Recommendations are given for increasing the level of greening of Ru ssian companies. The conclusions drawn expand knowledge in the field of green economy and green finance in particular. The practical importance of the work for corporate managers is determined by the ability to predict the dynamics of environmental and financial indicators when developing plans to increase the level of environmental responsibility of the company, and for state and municipal authorities – the ability to effectively motivate companies to green their activities.

1. Gorbunova O. I., Kanitskaya L. V. Evaluation of influence of functioning of the environmental management system on the economic efficiency of the company’s activity. Fundamental'nye issledovaniya [Fundamental research], 2019, no. 10, pp. 23–28. (in Russ.)

2. Bogdanov V. D., Ilysheva N. N., Baldesku E. V., Zakirov U. S. The development of correlation model between economic development and environmental performance on the basis of non-financial reporting. Ekonomika regiona [Economy of region], 2016, vol. 12, no. 1, pp. 93–104. (in Russ.) DOI 10.17059/20161-7

3. Jaggi B., Freedman M. An examination of the impact of pollution performance on economic and market performance: pulp and paper firms. Journal of Business Finance and Accounting, 1992, vol. 19, no. 5, pp. 697–713. DOI 10.1111/j.1468-5957.1992.tb00652.x

4. Savitz A., Weber K. The Triple Bottom Line: How Today’s Best-Run Companies Are Achieving Economic, Social and Environmental Success – and How You Can Too. San Francisco, Jossey-Bass, 2006, 320 p.

5. Dowell G., Hart S., Yeung B. Do Corporate Global Environmental Standards Create or Destroy Market Value? Management Science, 2000, vol. 46, no. 8, pp. 1059–1074. DOI 10.1287/mnsc.46.8.1059.12030

6. Angelia D., Suryaningsih R. The Effect of Environmental Performance and Corporate Social Responsibility Disclosure Towards Financial Performance (Case Study to Manufacture, Infrastructure, and Service Companies That Listed at Indonesia Stock Exchange). Procedia – Social and Behavioral Sciences, 2015, vol. 211, pp. 348–355. DOI 10.1016/j.sbspro.2015.11.045

7. Hart S., Ahuja G. Does It Pay to be Green? An Empirical Examination of the Relationship between Emission Reduction and Firm Performance. Business Strategy and the Environment, 1996, vol. 5, no. 1, pp. 30–37. DOI 10.1002/(SICI)1099-0836(199603)5:1<30::AID-BSE38>3.0.CO;2-Q

8. Liu Y., Xi B., Wang G. The impact of corporate environmental responsibility on financial performance – based on Chinese listed companies. Environmental Science and Pollution Research, 2021, vol. 28, pp. 7840–7853. DOI 10.1007/s11356-020-11069-4

9. Kim Y., Statman M. Do Corporations Invest Enough in Environmental Responsibility? Journal of Business Ethics, 2012, vol. 105, no. 1, pp. 115–129.

10. Lee J., Maxfield S. Doing Well by Reporting Good: Reporting Corporate Responsibility and Corporate Performance. Business and Society Review, 2015, vol. 120, no. 4, pp. 577–606. DOI 10.1111/basr.12075

11. Byus K., Deis D., Ouyang B. Doing well by doing good: Corporate social responsibility and profitability. SAM Advanced Management Journal, 2010, vol. 75, no. 1, pp. 44–55.

12. Hategan C.-D., Sirghi N., Curea-Pitorac R.-I., Hategan V.-P. Doing Well or Doing Good: The Relationship between Corporate Social Responsibility and Profit in Romanian Companies. Sustainability, 2018, vol. 10, no. 4, pp. 1–23. DOI 10.3390/su10041041

13. Lee J. Graves S., Waddock S. Doing good does not preclude doing well: corporate responsibility and financial performance. Social Responsibility Journal, 2018, vol. 14, no. 4, pp. 764–781. DOI 10.1108/SRJ-03-2017-0044

14. Lenz I., Wetzel H. A., Hammerschmidt M. Can doing good lead to doing poorly? Firm value implications of CSR in the face of CSI. Journal of the Academy of Marketing Science, 2017, vol. 45, no. 5, pp. 677–697. DOI 10.1007/s11747-016-0510-9

15. Margolis J. D., Elfenbein H. A., Walsh J. Does it Pay to Be Good... and Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance. Organizations & Markets: Motivation & Incentives eJournal, 2009, pp. 1–68. DOI 10.2139/ssrn.1866371

16. Waddock S., Graves S. The Corporate Social Performance – Financial performance Link. Strategic Management Journal, 1997, vol. 18, no. 4, pp. 303–319. DOI 10.1002/(SICI)1097-0266(199704)18:4<303::AID-SMJ869>3.0.CO;2-G

17. McGuire J. B., Schneeweis T., Branch В. Perceptions of Firm Quality: A Cause or Result of Firm Performance. Journal of Management, 1990, vol. 16, no. 1, pp. 167–180. DOI 10.1177/014920639001600112

18. Alexander G., Buchholtz R. Corporate Social Responsibility and Stock Market Performance. Academy of Management Journal, 1982, vol. 21, no. 3, pp. 479–486. DOI 10.5465/255728

19. Dukmasova N. V. Ekonomicheskaya effektivnost' vnedreniya sistemy ekologicheskogo menedzhmenta na promyshlennyh predpriyatiyah [Economic efficiency of the introduction of an environmental management system at industrial enterprises]. Diss. for a Cand. of Economic Sci. Ekaterinburg, 2015, 214 р. (in Russ.)

20. López M. V., Garcia A., Rodriguez L. Sustainable development and corporate performance: a study based on the Dow Jones Sustainability Index. Journal of Business Ethics, 2007, vol. 75, no. 3, pp. 285–300. DOI 10.1007/s10551-0069253-8

21. Friedman M. The Social Responsibility of Business is to Increase Profits. New York Times Magazine, 1970, September 13, pp. 122–126.

22. Aupperle K. E., Carroll A. B., Hatfield J. D. An empirical examination of the relationship between corporate social responsibility and profitability. Academy of Management Journal, 1985, vol. 28, no. 2, pp. 446–463. DOI 10.5465/256210

23. Ullman A. H. Data in Search of a Theory: A Critical Examination of the Relationships among Social Performance, Social Disclosure, and Economic Performance of US Firms. Academy of Management Review, 1985, vol. 10, no. 3, pp. 540–557. DOI 10.5465/amr.1985.4278989

24. Karginova-Gubinova V. V., Scherbak A. P., Tishkov S. V. Opportunistic behavior of economic entities: manipulation of environmental responsibility in economic interests. Sovremennaya nauka: aktual'nye problemy teorii i praktiki. Seriya: Ekonomika i Pravo [Modern Science: actual problems of theory and practice. Series of “Economics and law”], 2020, no. 05, pp. 30–35. (in Russ.) DOI 10.37882/2223–2974.2020.05.18