Social Networking Influence on Environmental and Corporate Performance

In this paper, we examine the role of social networking on the adoption of sustainability policies and related strategies that organizations implement. There is a growing consensus among corporate leaders that taking action on climate change is a responsible business decision and in many respects, it is a necessary action because of the increasing requirements for organisations to report on their environmental profile. As reported in the literature, social networking and board interlocks affect the way companies make decisions in relation to financial matters. In this paper we examine whether this relation can also be extended to environmental performance and environmental decision making. Using a sample of 310 companies from USA for 2008 our results shows preliminary evidence that this relationship indeed exist. More specifically, we show that companies that are highly connected also tend have formal structures for environmental governance, such as, clear environmental targets and related performance incentives, and also count with several dissemination mechanisms for such actions and policies, including corporate website and 'green' contents and targets, as well as formal ways of reporting, such as annual 'green' reports. Moreover, these so called 'green' companies not only are highly connected to each other, but also, in relation to financial performance, tend to be of major size (measured as the total assets) and have higher return on equity compared to their unconnected and not so environmentally friendly peers.