International Review of Environmental and Resource Economics > Vol 12 > Issue 4

Why Are Firms Environmentally Responsible? A Review and Assessment of the Main Mechanisms

Kjell Arne Brekke, University of Oslo, Norway, k.a.brekke@econ.uio.no Sanja Pekovic, University of Montenegro, Montenegro, psanja@uvg.ac.me
 
Suggested Citation
Kjell Arne Brekke and Sanja Pekovic (2018), "Why Are Firms Environmentally Responsible? A Review and Assessment of the Main Mechanisms", International Review of Environmental and Resource Economics: Vol. 12: No. 4, pp 355-398. http://dx.doi.org/10.1561/101.00000105

Published: 06 Dec 2018
© 2018 K. A. Brekke and S. Pekovic
 
Subjects
Environmental Economics,  Corporate governance
 
Keywords
JEL Codes: M14Q56
Corporate environmental responsibilitynew stakeholder theoryenvironmental economicscorporate governance
 

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In this article:
1. Introduction
2. What is Corporate Environmental Responsibility
3. The Main Mechanisms — Stakeholder
4. Conclusion
References

Abstract

This review explores the mechanisms through which environmental responsibility influences firm performance. We identify several mechanisms related to stakeholders — customers, employees, investors, government, non-governmental organization, and executives. We try to identify trends both in the importance of different mechanisms in our knowledge about them.

We find that recent literature put increasing emphasis on the role of employees as driver of corporate environmental responsibility. The literature also argues that socially responsible investments are becoming more and more mainstream. Finally, we argue that interaction between stakeholders is an important driver of environmental responsibility, with the interaction of NGOs and consumers as an important example.

DOI:10.1561/101.00000105