Turning Green to Gold in the Construction Industry: Fable or Fact?: Fid-Bau Portal

Turning Green to Gold in the Construction Industry: Fable or Fact?

Lu, Yujie / Cui, Qingbin / Le, Yun

Green principles have been increasingly incorporated into planning, design, construction, and maintenance processes in the engineering and construction industry. Along with the growth of the green initiative, going green not only demonstrates corporate social responsibility, but may yield significant economic benefits. This study compares financial performance between green and conventional firms in the engineering and construction industry. A total of 22 sample companies used in this empirical analysis are categorized into two groups—green versus conventional firms—in accordance with Engineering News Record and Newsweek green company lists. Two groups are compared in terms of short-term financial performance, long-term economic value, and market value. The analysis shows that green firms outperform conventional firms on return on equity (17.4 versus 8.2%) and economic value added margin (0.35 versus $- 1.43 %$ ). However, the green strategy has not yet been factored into corporate market value. The findings yield important managerial implications for engineering and construction organizations to integrate sustainability into their business operation.