The extent to which a firm’s activities impact the natural environment is an increasingly relevant topic in today’s managerial life. Failing to demonstrate a responsible and friendly attitude towards the natural environment may lead to strong negative consequences for a firm’s financial performance. Hundreds of examples in business press and general media are proof of the harshness with which powerful stakeholders punish firms that misbehave from an environmental standpoint. For example, BP’s recent disaster in the Gulf of Mexico caused the company more than 50% of its market capitalization. These catastrophes do not vanish quickly, but on the contrary stay in people’s minds for many years. The leakage of methyl isocyanate –a highly toxic gas– in a Union Carbide’s facility in Bhopal, India, that killed more than 3,000 people in 1984 still remains present in our memories.
[This research paper has been reproduced with permission of the authors, professors of IE Business School, Spain http://www.ie.edu/]
Very different article! However, I thought that some insights were missing about the knee-jerk reactions from public that normally entail such disasters. How can public be made aware of this clear distinction between good and bad corporations? Post Fukushima, there have been a systematic opposition in India against setting up of nuclear plants for peaceful purposes. In a power starved country, I believe we may have to trade-off some risk against the potential benefits of nuclear power. The question remains, how well can Govt. and corporates convince people in general.
on Jul 20, 2011