Sustainable Development and Energy Transition in Europe and Asia

6The Relationship Between Shareholder Value and International Transfer of Environmental Management Practices

This chapter analyzes the relationship between the shareholder value of multinational enterprises and the international transfer of environmental management practices. We examine the hypothesis that the higher return of a firm’s equity is positively related to the higher transfer of environmental management practices to the overseas subsidiary. However, the results of the analysis have not supported the hypothesis. The relationship of a shareholder value with the environmental management system is negative. The shareholder value is thus associated with the reluctance to transfer the environmental management system because the firm regards environmental investment as an additional cost or has minimal environmental concerns.

6.1. Introduction

With the philosophy of sustainable development, environmental management has become a prerequisite of business activities for most firms. A large part of the environmental load originates from the activities of firms. Accordingly, firms in developing and developed economies need to make all possible efforts to reduce the environmental load. Diffusion of advanced technologies and practices, which are owned by multinational enterprises (MNEs), among developing and developed countries, is both necessary and effective in reducing the load. MNEs that operate globally can disseminate their practices in overseas operations and transfer them ...