In the January 2017 edition of the Journal of Cleaner Production there is a study that has investigated the relationship between green management and the performance of Italian firms. The study shows that the relationship between green management and performance is U-shaped. This means that environmental activities have a positive effect after a minimum threshold.
This means that if companies want to invest more than the minimum legal environmental requirements in environmentally friendly practices to reduce environmental impact, there is a clear risk-return consideration to be made. The U-shaped performance makes clear that green initiatives can lead to a lower performance if there is not a comprehensive environmental management system. Such a system should make clear how the risk-return profile of doing nothing develops over time in relation the proposed green strategy.
The study shows that green firms, with more advanced environmental management, have a higher performance.
Literature
Riillo, C. A. F. (2017). Beyond the question “Does it pay to be green?”: How much green? and when?. Journal of Cleaner Production, 141, 626-640.
Norbert Bol 