Eco-activity and innovativeness: What is their relation to environmental performance in consumer firms and industrial firms?

Abstract

This chapter examines the link between environmental performance, corporate social performance and innovativeness for consumer and industrial firms, using company data on R&D, environmental and corporate social performance from the Kinder, Lydenberg and Domini (KLD) database for US-based firms. We find empirically that during the period from 1999 to 2008, there has been an increase in environmental action, especially since 2004. A positive correlation is found to exist between environmental and non-environmental social performance in many dimensions and a positive but weak link between environmental performance and R&D per employee or unit of sales. This chapter shows that there is a difference between consumer and industrial firms in terms of the evolution of eco-activities and environmental impact. Contrary to what we expected, industrial firms undertook more product-related eco-activities than consumer firms. Industrial firms also showed a greater increase in process-related eco-activity. The increase in eco-activity went with an increase in eco-impact in both company types, suggesting that environmental action did not arrest environmental degradation overall.