Do green supply chain management initiatives impact stock prices of firms?

a r t i c l e i n f o Keywords: Event study Green operations Green supply chain Stock prices Sustainability Recycling Remanufacturing Although firms have been taking green supply chain management (GSCM) initiatives, it is not known whether they create value for firms. We analyze 104 announcements related to GSCM using an event study, and determine what causes statistically significant gain in stock prices for these firms. Manufacturing firms, firms with high R&D expenses, and early adopters show a strong increase in stock prices on the day of the announcement. At the same time, small firms, firms not well-known for taking green initiatives, as well as firms that are low in growth potential considerably surprise the market when they make such announcements. In recent years, green supply chain management (GSCM) initiatives have gained considerable prominence. However, how much value it brings to organizations is still being investigated. While an Aberdeen research study indicates companies implementing successful GSCM initiatives may benefit from reduction in energy and logistics costs, and enhanced competitive advantage, the study also mentions a majority of the corporate respondents (55%) who identified green initiatives as a top focus reported that the key pressure for these initiatives were overwhelmingly related to corporate social responsibility [85]. Klein et al. report sustainability is not a core part of most companies' strategies in spite of its increasing eminence [51]. Another research study surveyed more than 125 supply chain, operations, finance professionals and executives around the world across multiple industry segments to understand how the organizations are coping with growing environmental concerns in managing complex supply chains [1]. The study concludes that most of the organizations have been slow to address these issues. The findings from these studies show that while green supply chain has received significant attention, organizations are still debating the benefits it may generate. There are various reasons behind the dilemma. First, different parties involved in a GSCM initiative may not have the same opinion on 'greenness' of the initiative. Also, comprehensive methodology for monitoring progress and performance evaluation of such initiatives is mostly lacking and still in the developmental stage. In addition, while some initiatives may yield significant benefits in the long run their short-term outcomes may not be very attractive. Also, there is the risk of adopting a relatively unproven technology. Some of the GSCM projects may have involved multiple organizations and all key supply chain …