The link between Corporate Environmental and Financial Performance: A study on Scandinavian firms

Abstract: Corporate Social Responsibility (CSR) has won terrain among managers during the previous decades; however, there are managers who still oppose it. These managers believe that a firm is better off by focusing on what it is good on, which does not incorporate CSR. However, empirically, the link between CSR and a firm’s financial performance is unclear. In empirical research, CSR is defined as corporate social performance (CSP). In this thesis I test, through multiple linear regressions, if there is a link between the environmental dimension of CSP (corporate environmental performance) and corporate financial performance (CFP). The results imply that there is a neutral link between corporate environmental performance (CEP) and CFP, which means that a firm’s engagement in environmental issues do not enhance or harm its financial performance.