The determinants of corporate sustainability performance


  • The authors thank Philip Gray, two anonymous referees and participants at the 2007 AFAANZ Conference for their helpful comments and suggestions. We also thank the Dow Jones Sustainability Index for provision of data.


This paper investigates the factors that drive high levels of corporate sustainability performance (CSP), as proxied by membership of the Dow Jones Sustainability World Index. Using a stakeholder framework, we examine the incentives for US firms to invest in sustainability principles and develop a number of hypotheses that relate CSP to firm-specific characteristics. Our results indicate that leading CSP firms are significantly larger, have higher levels of growth and a higher return on equity than conventional firms. Contrary to our predictions, leading CSP firms do not have greater free cash flows or lower leverage than other firms.