Environmental responsibility of business and its impact on its performance: a contemporary study with reference to select listed Indian firms
Student name: Ms Tanvi Khurana
Guide: Dr Manipadma Datta
Year of completion: 2016
Host Organisation: TERI University
Abstract: Awareness about environmental apprehensions like climate change, pollution, environmental resource destruction and depletion etc., is on a rise in the present day. With an increasing consciousness there has been a switch towards environmental friendly production and consumption methods. Studies on business performances have shown that environmental friendly practices of a business are influenced by the firm’s existing and potential stakeholder groups. For a business, being environmentally responsible involves a risk of today’s responsible investment turning into tomorrow’s liability, hence increasing the costs.
The aim of this study is to observe whether or not the Indian stock market values firm's environmental responsibility. It also attempts to determine major factors for select listed companies that may possibly make a firm ‘greener’ as compared to the other firms. Thus, the study will answer the following questions; what are the major factors in the context of Indian businesses which determine the trade-off between responsible or environmental investment and high potential returns by not investing environmental consciously? What is the nature/direction of correlation between firms’ environmental response and their financial performance for major listed Indian companies? Lastly, does the Indian capital market value firms’ environmental concerns and compliance?
The sample for the study is the companies listed in the BSE-100 and GREENEX portfolios. Further content analysis and econometric modelling techniques have been used to find the characteristics of firms that have been a part of the GREENEX portfolio.
Key Words: BSE-100, S&P GREENEX, Market Value, Environmental performance
