~Does Community And Environmental Responsibility Affect Firm Risk? Evidence From UK Panel Data 1994-2006~

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Executive Summary

The purpose of this paper is to examine the relationship between corporate environmental performance and firm risk in the British context. Using the largest dataset so far assembled, with Community and Environmental Responsibility (CER) rankings for all rated UK companies between 1994 and 2006, the authors show that a company's environmental performance is inversely related to its systematic financial risk. However, an increase of 1.0 in the CER score is associated with only a 0.02 reduction in firm's risk and cost of capital.

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