ISO 14001 certification and financial performance: selection-effect versus treatment-effect

• Published in: Journal of cleaner production Vol. 19; no. 1; pp. 1 - 12
• Main Authors: Heras-Saizarbitoria, Iñaki, Molina-Azorín, José F., Dick, Gavin P.M.
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 2011
• Subjects: Causation; Certification; Cleaning; Data processing; Environmental management; Financial performance; Inference; ISO 14001; Panels; Performance enhancement; Shedding; Spain; ISO 14001; Financial performance; Environmental management; Certification; Causation
• ISSN: 0959-6526; 1879-1786
• DOI: 10.1016/j.jclepro.2010.09.002

The paper explores the bi-directional relationship between ISO 14001 certification and financial performance with the aim of shedding light on whether better performance is due to the beneficial effects of ISO 14001 or due to selection-effects where better performance precedes accreditation. The study uses a five year longitudinal analysis to compare the financial performance of firms in Spain before and after certification. The results of a multivariate panel data analysis find that firms with better than average performance have a greater propensity to pursue accreditation but there is no evidence that improvements in performance follow certification. This suggests that the inference that environmental variables cause improved financial performance may be unwise in research studies that can only measure association.