The impact of environmental supply chain sustainability programs on shareholder wealth

摘要

Purpose - Multinationals are increasingly pressured by stakeholders to commit to environmental sustainability that exceeds their own firm borders. As a result, multinationals have started to commit to environmental supply chain sustainability programs (ESCSPs). However, little is known about whether such commitment is rewarded or punished by financial markets, and if the stock price reaction differs depending on the type of firm that commits to such a program. This paper aims to discuss these issues. Design/methodology/approach - The authors conduct an event study followed by two-equation Heckman modeling, using a sample of 66 multinationals that committed to the ESCSP of the Carbon Disclosure Project (CDP). Findings - It was found that generally there is a marginally significant negative stock price reaction to announcement of participation in this ESCSP (i.e. -0.8 percent, P<0.10). However, the authors argue and show that firms in industries that have historically faced more pressure from consumers are less likely to announce their participation. If one corrects for this industry bias, then the negative stock price reaction is even more pronounced (i.e. -3.2 percent, P<0.05). Research limitations/implications - Using objective data, the study provides insights into the shareholder wealth effects of firms that commit to the ESCSP of the CDP. As such, the sample does not cover firms that set up their own ESCSPs. Practical implications - The paper is valuable for practitioners and investors who are interested in finding out if participation in ESCSPs is financially attractive, and for (governmental) policy makers who may want to be assured that there is sufficient incentive for firms to pursue environmental supply chain sustainability. Originality/value - This is the first paper that captures how financial markets react to announcements of ESCSPs.