Keywords: information-based policy instruments, corporate environmental reporting, environmental performance, financial performance, Japan, environmental policy, environmental conservation, sustainable economy, market economy, sustainable development, sustainability
Corporate environmental and financial performances and the effects of information-based instruments of environmental policy in Japan
Focusing on 278 listed corporations in Japan, the present study tests the hypothesis that robust environmental conservation activities have a positive effect on their financial performance. It also examines the role played by the environmental policies introduced and strengthened by the government since the end of the 1990s. By a statistical causality analysis using data from 1999 to 2003, we have shown that a positive effect of corporate environmental activities on financial performance was verified more clearly when data accounting the firms' responses to environmental policies were included with information about their management activities. Furthermore, an analysis of industrial groups revealed some differences. From the recent experience of environmental policies in Japan, we suggest that information-based environmental policy measures are effective to encourage the ongoing transition towards a more sustainable market economy.