Companies that use key words related to sustainability in their annual reports tend to have higher greenhouse gas emissions than those who don’t use such words, according to new research.
The paper by University of Notre Dame management professor Sarv Devaraj and 2010 Notre Dame MBA graduate Suvrat Dhanorkar recently won the prize for “Best Environmental Issues Paper”, out of 1,100 entries submitted to the International Conference of the Decision Sciences Institute.
The paper also found that high use of the keywords correlated with poor performance in Newsweek’s rankings of companies’ environmental performance.
“One of the reasons for the negative finding could be that companies are including mentions of sustainability in their annual reports because the topic increasingly is important to investors, even though operational measures haven’t yielded actual performance results as yet,” Devaraj said.
But he said that over the longer term, the companies that “talk” sustainability now could turn out to be ones that significantly improve their environmental performance. The study is now being expanded to cover multiple years, to test that hypothesis.
In the video above, Devaraj discusses the motivation behind the research and its major findings.