{"title":"Environmental Sustainability and Business Profitability: Profiling Winners and Losers With Machine Learning","authors":"Xiaoliu Xu, Abdoul G. Sam","doi":"10.1002/bse.4236","DOIUrl":null,"url":null,"abstract":"We utilize a rich dataset of manufacturing firms to investigate the heterogeneous effects of ISO 14001 on the financial performance of certified firms. We employ machine learning techniques, specifically causal tree and causal forest, to uncover these effects. Our findings reveal consistently positive average effects of ISO 14001 certification on sales revenue across all categories of firms. However, when it comes to profitability, we observe significant heterogeneity in the impact of ISO 14001 certification. Specifically, ISO 14001 certification spurs profitability gains among more innovative firms with lower debt‐to‐equity ratios, among firms that are more reliant on exports, and those that operate outside the electronic component industry. Conversely, firms with a large debt‐to‐equity ratio and those that are privately held experience negative effects of ISO 14001 certification on profitability. Our study contributes to the literature examining how environmental sustainability programs, such as ISO 14001, affect firm financial performance in a heterogeneous manner. By uncovering the nuanced effects of ISO 14001 certification based on firm characteristics, our research provides valuable insights that can assist in optimizing the outcomes of similar environmental programs by tailoring strategies based on specific firm attributes.","PeriodicalId":9518,"journal":{"name":"Business Strategy and The Environment","volume":"3 1","pages":""},"PeriodicalIF":12.5000,"publicationDate":"2025-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Business Strategy and The Environment","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1002/bse.4236","RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
We utilize a rich dataset of manufacturing firms to investigate the heterogeneous effects of ISO 14001 on the financial performance of certified firms. We employ machine learning techniques, specifically causal tree and causal forest, to uncover these effects. Our findings reveal consistently positive average effects of ISO 14001 certification on sales revenue across all categories of firms. However, when it comes to profitability, we observe significant heterogeneity in the impact of ISO 14001 certification. Specifically, ISO 14001 certification spurs profitability gains among more innovative firms with lower debt‐to‐equity ratios, among firms that are more reliant on exports, and those that operate outside the electronic component industry. Conversely, firms with a large debt‐to‐equity ratio and those that are privately held experience negative effects of ISO 14001 certification on profitability. Our study contributes to the literature examining how environmental sustainability programs, such as ISO 14001, affect firm financial performance in a heterogeneous manner. By uncovering the nuanced effects of ISO 14001 certification based on firm characteristics, our research provides valuable insights that can assist in optimizing the outcomes of similar environmental programs by tailoring strategies based on specific firm attributes.
期刊介绍:
Business Strategy and the Environment (BSE) is a leading academic journal focused on business strategies for improving the natural environment. It publishes peer-reviewed research on various topics such as systems and standards, environmental performance, disclosure, eco-innovation, corporate environmental management tools, organizations and management, supply chains, circular economy, governance, green finance, industry sectors, and responses to climate change and other contemporary environmental issues. The journal aims to provide original contributions that enhance the understanding of sustainability in business. Its target audience includes academics, practitioners, business managers, and consultants. However, BSE does not accept papers on corporate social responsibility (CSR), as this topic is covered by its sibling journal Corporate Social Responsibility and Environmental Management. The journal is indexed in several databases and collections such as ABI/INFORM Collection, Agricultural & Environmental Science Database, BIOBASE, Emerald Management Reviews, GeoArchive, Environment Index, GEOBASE, INSPEC, Technology Collection, and Web of Science.