The effects of environmental conservation efforts on financial performance: a case study of the industrial and allied sector
Abstract
The purpose of this study was to determine the impact of environmental conservation
on financial performance of organizations' management. The study was done using
the exploratory design method. The target population were all the 18 public listed
companies under industrial and allied segment in Kenya. A census of al I the 18
companies was therefore conducted. Both closed and open ended questionnaires were
used to collect primary data from the officers of the company of the selected
companies. The raw data from the field was analyzed using descriptive statistics. Data
was presented in percentages and cross tabulation.
The study found that in most organizations, sustainable environmental conservation
development was considered an organizational important goal. Thus organizations
practiced environmental ethics, management and safety practices, such as energy
reduction, waste reduction, waste water reduction, adhering to statutory legislation
environmental conservation by investing III technology which mmnnrze
environmental impact of operation and production and planting trees. The study
revealed that organizations spend great much resource in conserving the environment;
by upgrading machines and infrastructure to meet the environmental conservation
standards, sponsoring environmental conservation, and environmental rehabilitation
programs. Environmental conservation activities engaged included; land rehabilitation
through reforestation, Mau forest reforestation, tree campaign of UNEP,ECO
challenge campaign, waste disposal management, and tree planting activities.
The study revealed that organizations' expenses incurred for the last three years in
environmental conservation had promoted organizations profitability, indirect benefits
i.e. improved organization image. Further, the environment conservation programs
affected management and financial decisions as well as management strategies.
Therefore, budgeting process was affected, though at a small extent. The study
revealed that more than half of the respondents indicated that their firm performance
indicators profitability, liquidity, solvency and debt ration were within the expected
limits. The study showed that environmental conservation effort had no great effect
on the marketability of firm's stock and cost of capital, apart from effect on the firm
stocks and cost of capital. Moreover, environmental conservation had affected firms'
equity and debt.
TIle following recommendations based on the study findings were made;
Industrial and allied sector need to develop a strong financial policy guiding the
environmental conservation since the current study established that only a few fi1111s
had policy guiding environmental conservation. This will go along in reducing
competition with the wealth maximisation goal of a firm. This will also guide the
organisation financial decisions.
With the growmg concem for 'carbon credit', "green goals" and environmental
sustainable production, industrial and allied sector should tap into this potential
thereby attracting strategic investors and potential financiers through internal
certification on environmental management systems. This will also lead to
organisation enjoying financial subsidies as results of these efforts.
Citation
Masters Of Business Administration (MBA) DegreePublisher
University of Nairobi School of Business
Description
A management research project submitted in partial
fulfilment of the requirements for the Degree Of
Master of Business Administration (MBA), Faculty of
Commerce, University of Nairobi