THE ROLE OF CORPORATE SUSTAINABILITY AND ITS CONSISTENCY ON FIRM FINANCIAL PERFORMANCE: CANADIAN EVIDENCE

Abstract

This paper investigates the impact of corporate sustainability and the consistency of corporate sustainability efforts on firm financial performance in Canada. Using data on 266 Canadian companies over the 2007–2017 period, we find a significantly posi- tive association between corporate sustainability performance and firm financial per- formance. In addition, we find that companies that perform consistently well on sustainability (i.e., consistent performers) achieve better financial performance com- pared to inconsistent performers. Thus, far from their being net costs/expenses, our results indicate that corporate sustainability performance and consistency in sustain- ability performance both provide net benefits and significantly impact financial per- formance positively, implying that corporate sustainability not only helps address the needs of the current and future generations but also has a positive effect on the corporate bottom line. Taken together, our results suggest that not only does corpo- rate sustainability have a positive effect on firm performance, but better financial performance may be achieved through a committed—rather than a “tokenism”— approach to corporate sustainability