Environmental performance and employee welfare: Evidence from health benefit costs

Abstract

This article studies whether corporate environmental performance affects its health benefit costs. I find a firm's environmental performance is negatively associated with its employee health benefit costs. Cross-sectional tests also show the effect is stronger for companies with improving employee health or located in a region with higher population health risks. In addition, the correlation only exists for chemicals released onsite as opposed to offsite release, indicating the effect is driven by the pricing of health risks, rather than pure ethical reasons. These results suggest that insurance companies promote corporate policyholders' green behavior indirectly by rationally pricing corporate environmental efforts.