Environmentally friendly business practices act as a 'reliability infrastructure' that prevents bankruptcy rather than a way to increase profits.
April 1, 2026
Original Paper
Sustainability as operational resilience: Environmental practices and corporate stability across industries
SSRN · 6504722
The Takeaway
Instead of boosting average performance or firm value, sustainability practices stabilize a company's operating conditions. In resource-heavy sectors, 'going green' essentially functions as an insurance policy that reduces the risk of financial collapse during market shocks.
From the abstract
This study examines whether environmental practices contribute to corporate resilience by stabilizing operating conditions rather than improving average performance. While prior research evaluates sustainability primarily through profitability or firm value, organizations often fail due to vulnerability to adverse shocks rather than insufficient returns. The analysis therefore investigates sustainability as a mechanism reducing financial distress risk.Using a longitudinal multi-industry panel, t