Is Sustainability Sustainable? An Investigation of the Concept of Sustainable Business and its Influence on Financial Performance and Competitive Advantage Article Type: Corporate Responsibility and Sustainability

By Philip R. Walsh.

Published by The Sustainability Collection

Format Price
Article: Print $US10.00
Article: Electronic $US5.00

It has been argued by Alexander (2007) that the implementation of morally preferable initiatives such as environmental sustainability fail in contemporary markets because those initiatives require actions on the part of management that will conflict with profit maximization. The purpose of this paper is to investigate the concept of sustainable business and to examine its influence on financial performance and competitive advantage. An attempt to measure the influence of sustainability on financial performance will be undertaken by establishing whether or not there is a statistically significant relationship between sustainable development and financial performance by comparing financial performance ratios of firms that implement sustainability strategies with their industry competitors who do not.
The research sample comprises ten companies that were repeatedly listed on “The Global 100 Most Sustainable Corporations in the World” from 2005-2008, representing global-based, publicly-traded organisations. The relationship between sustainability and financial performance is presented through the adaptation of Epstein and Roy’s (2001) sustainability-financial performance framework and investigated further by hypothesis testing.
This study suggests that companies which show up repeatedly in the list of the “Global 100 Most Sustainable Corporations in the World” generally do not financially outperform their competition. These results imply that they do not have a sustainable competitive advantage as a result of their sustainability actions providing support for the argument of Alexander (2007) that relying on the current competitive marketplace to broadly embrace and implement sustainability strategies will not work and that the application of light-handed market regulation is required to promote sustainability.

Keywords: Sustainability, Sustainable Competitive Advantage, Financial Performance Ratios, The Global 100 Most Sustainable Corporations in the World

The International Journal of Environmental, Cultural, Economic and Social Sustainability, Volume 6, Issue 1, pp.135-148. Article: Print (Spiral Bound). Article: Electronic (PDF File; 794.290KB).

Dr. Philip R. Walsh

Associate Professor - Entrepreneurship & Strategy, Ted Rogers School of Management, Ryerson University, Toronto, Ontario, Canada

Dr. Phil Walsh is an Associate Professor of Strategy in the School of Business Management, Faculty of Business, Ted Rogers School of Management, Ryerson University, Toronto, Canada. Phil has also practiced for the past 28 years as a strategic planning consultant and professional geoscientist working with many of Canada’s top energy companies and provincial energy ministries. His research over the past few years has focused on sustainable development in the energy industry both from a management and technical perspective. He has published papers in the fields of leadership and strategic change management with an emphasis on honesty, scenario planning, networks and sustainable competitive advantage. Dr. Walsh holds a B.Sc. in Geological Sciences from Queen’s University, Canada, an MBA from the Ivey School of Business, University of Western Ontario, Canada and a Ph.D. in Strategic Management from the University of Bradford, UK. Prior to joining Ryerson, he was the MBA Programme Director and a Lecturer in Corporate Strategy at the University of Surrey, U.K.

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