The Relationship between Green Supply Chain Management and Profitability

Abstract

In today’s business environment, companies are facing increased pressure from different sources, such as consumers and communities, stricter governmental regulations and scarcity of resources; to enhance their sustainable behavior. This escalating global awareness of the impact of manufacturing and operational processes on the environment has translated into increased managerial action to balance incorporates economic, financial and environmental performance. Green Supply Chain Management (GSCM) has emerged as an important organizational philosophy to achieve targeted economic and market objectives while reducing environmental risk, reducing cost, optimizing resources and enhancing operations throughout the supply chain. Green supply chain management practices, activities, and their impact on different aspects of corporate performance have been gaining increased attention from academia, industry and customers. The current research aims to investigate the effect of GSCM practices; Greenhouse Emissions, Recycling, Waste, and Renewable Energy on firms’ profitability. Results showed that waste had a significant negative impact on the profitability measured by return on equity which implied that companies should strive to reduce their waste to be able to increase their profitability.