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  • November 2014
  • Article
  • Management Science

The Impact of Corporate Sustainability on Organizational Processes and Performance

By: Robert G. Eccles, Ioannis Ioannou and George Serafeim
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Abstract

We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 U.S. companies, we find that corporations that voluntarily adopted sustainability policies by 1993—termed as High Sustainability companies—exhibit by 2009 distinct organizational processes compared to a matched sample of companies that adopted almost none of these policies—termed as Low Sustainability companies. The boards of directors of High Sustainability companies are more likely to be formally responsible for sustainability, and top executive compensation incentives are more likely to be a function of sustainability metrics. High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.

Keywords

Sustainability; Sustainability Management; Sustainability Research; Sustainability Reporting; Sustainability Targets; Corporate Social Responsibility; Corporate Accountability; Reporting; Corporate Governance; Investor Clientele; Investor Communication; Stock Market; Corporate Social Responsibility And Impact; Environmental Sustainability; Performance; United States

Citation

Eccles, Robert G., Ioannis Ioannou, and George Serafeim. "The Impact of Corporate Sustainability on Organizational Processes and Performance." Management Science 60, no. 11 (November 2014): 2835–2857.
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About The Author

George Serafeim

Accounting and Management
→More Publications

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More from the Authors
  • Cross‐firm Return Predictability and Accounting Quality By: Wen Chen, Mozaffar Khan, Leonid Kogan and George Serafeim
  • Measuring Employment Impact: Applications and Cases By: Katie Panella and George Serafeim
  • Stock Price Reactions to ESG News: The Role of ESG Ratings and Disagreement By: George Serafeim and Aaron Yoon
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