Given the global emphasis on corporate social responsibility [CSR] and sustainability initiatives, and an increasing focus of public policy on CSR disclosure and attestation, we investigate whether profitability trumps policy concerns: Specifically whether it is profitable to pollute. Prior research has provided conflicting evidence on this issue. We employ annual returns as a proxy for financial performance, and assess environmental performance using 13 distinct variables. Our conclusion is that policy initiatives should focus on environmentally friendly activities that have the potential to enhance (or not burden) the financial performance of firms if we wish those initiatives to be embraced.
