Why Are Firms Environmentally Responsible? A Review and Assessment of the Main Mechanisms
Kjell Arne Brekke & Sanja Pekovic
International Review of Environmental and Resource Economics, Volume 12, No. 4, November 2018.
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.