Understanding the relationships between environmental management practices and financial performances of multinational construction firms

Abstract

Growing attention to environmental protection has triggered drastic changes in the corporate practices of construction firms. Several studies have shown that multinational contractors have been relatively proactive in environmental management. However, the financial outcomes of environmental practices are not fully comprehended. Based on information disclosed through environmental reporting, this study examines the relationship between environmental management practices and the financial performance of multinational construction firms. The sample of construction firms is drawn from the Engineering News-Record (ENR) Top International Contractor list. Content analysis was used to extract and measure the degree of proactivity, and stepwise regression was adopted to screen for practices associated with financial performance. The results highlight the advantages and limitations of environmental management practices disclosed in environmental reporting and explore the impacts such practices have on financial performance. Among the environmental practices, pollution abatement on-site has significant impacts on firm short and long-term financial performances of multinational construction firms.