Environmental initiatives in relation to financial performance: A case on XYZ company

• Main Authors: Goyenechea, Mari Antonette, Lagrosa, Diana Rose B., Tan, Rafael
• Format: text
• Language: English
• Published: Animo Repository 2013
• Subjects: Corporations > Finance > Management; Financial statements; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/10504
• Institution: De La Salle University

The study Environmental Initiatives in relation to Financial Performance: A Case on XYZ Company aimed to determine the effects of environmental XYZ Companys environmental initiatives to its financial performance. However, the researchers were limited to no point of comparison between tools using solely the P&G scorecard to attain the subject company's supply chain environmental sustainability rating and also limited to using a financial data covering only the past four years of the business. Furthermore, this study adapted and utilized the company's financial ratios exclusively computed from the financial statements of the company to be able to determine their financial performance. Through out the review of literary works, the researchers found out that there are number of studies that showed a positive relation between environmental sustainability as the independent variable and financial performance as the dependent variable. Nevertheless, the researchers entertained the possibility of interdependence between the two variables. Additionally, the study was also geared towards achieving the objective of analyzing the current environmental practices of the company. To answer the problem of the study, the gathering of data was done in a qualitative and quantitative mode as company provided the researchers with two (2) kinds of data, the financial and environmental records of their four calendar years. Upon giving of data, the researchers proceeded with the treatment of environmental data that included utility (electrical and water) and disposal (hazardous and non-hazardous) records qualitative and quantitative in order to get XYZs sustainability rating. Using the P&G Scorecard, the individual sustainability ratings were then produced showing that in the span of 4 years from 2009 to 2012, XYZ only met the ideal rating of environmental sustainability in the year 2010 showing a rating of 3 while the in other years, the company fell below expectation for only having a rating of 2 with 5 as the highest mark. Afterwards, the researchers now correlated the environmental data with each of the financial ratios using the Linear Regression which involved four tests that all concluded that the two variables had neither a positive nor a negative relationship to each other given that the tests showed an equivalent of 0 constantly. To further substantiate the results, the researches mapped out through the financial data and attributed the accounts and specific costs explicitly affected by the company environmental initiatives. Given all that, the researchers concluded that XYZs environmental initiatives have not significantly affected its financial performance since through the linear regression, the researchers have proved that the company's financial ratios are left unaffected by the environmental sustainability performance measures. Also, our prior assumptions have been only evident to EBTDA as oppose to the other financial ratios that there is a positive relationship between the variables. However, it was also seen that in the past years, the overall effect of this increasing costs had become irrelevant since based on their financial data, increased earnings from the company's services compensated it. Nevertheless, even with this results, the researchers still suggests that the company should already secure its sustainability initiatives before they risk increasing their environmental costs to unsafe levels which might take effect against them in the future.