Revisiting the link between environmental performance and financial performance: who cares about private companies?

Purpose: The financial market change and the climate change in recent years have triggered the studies of the connection between corporate carbon performance and financial performance, although the link between the two remains elusive in private companies. This study examines the relationship between environmental and financial performance with a particular focus on private companies. Design/methodology/approach: This study compares public listed and private unlisted companies registered under the Australian NGER Act 2007 and investigates the link between carbon performance and financial performance in these two groups of companies during 2009 and 2010. Findings: The results show that carbon performance and financial performance are significantly negatively related in public listed companies, suggesting worse carbon performers tend to enjoy higher financial returns and stronger financial performers are more likely to pollute more and consume more energy. In private companies, no significant link between the two performances is found.