Siew, R Y J; Balatbat, M C A and Carmichael, D G (2013) The relationship between sustainability practices and financial performance of construction companies. Smart and Sustainable Built Environment, 2(1), pp. 6-27. ISSN 2046-6099
Abstract
Over recent years, a number of companies have committed to sharing information relating to their environmental, social and governance (ESG) activities, in response to a higher demand for transparency from stakeholders. This paper aims to explore the impact of such reporting on the financial performance of construction companies. This paper first examines the state of nonfinancial reporting of publiclylisted construction companies on climate change, environmental management, environmental efficiency, health and safety, human capital, conduct, stakeholder engagement, governance and other matters deemed to be of concern to institutional investors. It then presents the results of an empirical study on the impact of issuing nonfinancial reports and the extent of companies' sustainability practices (represented by ESG scores) on the financial performance of the companies. Financial performance is measured via a range of financial ratios. The paper finds that a majority of the publiclylisted construction companies studied have low levels of reporting, while construction companies issuing nonfinancial reports largely outperform those which do not in a number of selected financial ratios, although the correlation between financial performance and ESG scores is not strong. The originality of this research lies in its use of “hard data”, and it is supported by a wide range of financial ratios; this is distinguished from the existing, largely qualitative literature.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Australia; construction companies; financial performance; non-financial reporting |
| Index terms: | Australia, human capital, low level, governance, efficiency, investor, environmental management, transparency, stakeholder engagement, empirical study, construction company, health and safety, climate change, financial ratio, financial reporting, financial performance |
| Subjects: | sociology, measurement and scaling, sustainability assessment, economics, performance management, research methods, business analysis, health safety and environment, Geography, professional development, economic analysis, financial and cost management, organization, business, climate science, community and social dimensions |
| Topics: | Organizational Design, Quality Management, Stakeholder Management, Sustainability, Governance, Health and Safety, Business Strategy, Cost Management, Information Management, Research Practice, Geographical Context |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here