How Environmental Performance Affects Financial Performance in the Food Industry: A Global Outlook

The impacts of environmental performance on the financial performance of food firms are investigated in this paper using a sample of 6064 food companies from 51 countries. The financial performance is measured through sales and internal funds, and environmental performance is based on whether firms have adopted standards related to environmental management. The empirical results show that, for the full sample, food firms' sales are positively associated with environmental performance, while environmental performance does not impact internal funds. In subsample analyses, this paper finds that the environmental performance of firms in lower-middle-income and upper-middle-income countries has a more significant impact on sales than firms in high-income countries. Moreover, desirable environmental performance significantly increases the internal funds of food firms in most country groups except for high-income countries. Grouping countries by region, we find that environmental performance significantly influences sales in all regions except for Africa. However, for internal funds, it is only substantial in Africa. The results also imply the significance of expanding firm size and adopting foreign technology for food companies to achieve better financial performance.