Are Natural-RBV strategies profitable? A longitudinal study of the Brazilian Corporate Sustainability Index

Abstract

Purpose-The aim of this research is to analyze whether natural resource-based view (NRBV) strategies lead to financial performance, represented by market value in the Brazilian stock exchange (B3) Corporate Sustainability Index (ISE). Theoretical framework-The NRBV foresees three green strategies to achieve sustainable competitive advantage: Pollution prevention, product stewardship and sustainable development. Many studies have tested one or two of those strategies. We tested if all three strategies are related to the financial performance of companies in the ISE index. Design/methodology/approach-We collected five years of data from 18 companies that compose the ISE index and employed panel data analysis in this longitudinal study. Findings-All three strategies of the NRBV are related to the companies’ market value in different ways. The results diverge from the current literature because we found positive and negative links between environmental strategies and financial performance. Practical & social implications of research-This study contributes with empirical results from the B3 to analyze the ISE index using the NRBV approach as a theoretical basis. It suggests that not all environmental initiatives increase companies’ market value, as some actions may end up achieving the opposite outcome. Investors and society, in general, are entitled to know how companies implement sustainable strategies that go beyond those required by law. Originality/value-The major contribution of this study is it addresses all three NRBV strategies to investigate if it pays to be green in terms of market value, by analyzing the Brazilian sustainable organizations that compose the ISE index.