Environmental Performance and Financial Investment
We have already seen in the article "How Can Environmental Controls Also Benefit a Business?" that a company which invests in environmental training and the implementation of environmental controls and procedures will find that they will almost certainly recoup the initial cost many times over in the long term with the avoidance of issues such as expensive fines, unnecessary wastage and inefficient use of materials and other resources. They will also be much less likely to cause a significant environmental accident which causes widespread devastation and tarnishes their reputation and brand image amongst potential customers, leading to a sharp fall in sales. So in this case, financial investment in environmental controls and performance will most of the time provide a good return on investment.
For larger corporations, in particular those which are listed on a public stock exchange, their environmental performance can have a significant effect upon the level of investment they receive and the value of the company's share price. This is because many investment funds which have substantial amounts of money to invest are specifically tailored to buying shares in ethical companies. By being a major polluter, it will likely result in their shares not being eligible for purchase by these funds. As managers and directors often hold a large number of shares in the companies they run and receive additional shares as part of bonus packages, it is in their interest to have a share price which is as high as possible. Not only does environmental performance affect future share price appreciation, but an environmental disaster will cause a severe decline in the share price as current investors are spooked by the likely financial provisions for clean up costs, compensation payouts and reduced demand for its products.