Empirical Case Study On Influence Of Bp’s Environmental Performance On Its Financial Performance:2001-2010

Although different ways of pollutions caused during oil companies’ businesshave serious negative impacts on society and environment, oil giants had adoptedstrategy of environmental protection into their business development. Andexperiences have proved that concerns of environmental protection not only helpedpetroleum enterprises avoid potential conflicts, but also helped improve corporatebrand images and drove business, even brought huge economic benefits. As the firstpetroleum enterprises to reduce emissions, BP has rich experiences in environmentalmanagement, so studying the influence of BP’s environmental performance (EP) onits financial performance (FP) is of great meanings.Based on the existing theory research, the author conducted variables selection,raised hypothesis and established the MLR model. Then this article studied theinfluence rules of BP’s EP on its FP from the longitudinal perspectives by referencingBP’s environment and financial data from2001to2010. Two research hypotheses areas follows:(1) EP indicators can be divided into environmental pollution index (F1) andenvironmental protection index (F2). In the short term, F1and F2will reduce FP. Butin the long term, F1will have negatively impact on FP, while F2will increase thecorporate benefits, and its effect presents the U shape.(2) The integral EP has significantly negative effect on FP of the current periodand last for a certain period. However, the negative influence will decrease and mayturn to positive at a certain point. EP’s effect also keeps the U-hypothesis.Through statistical analysis results and hypothesis testing, we can draw threeresearch conclusions, namely,(1) the effect of F1on FP presents an inverse-U shape;(2) the effect of F2on FP presents a U shape;(3) the effect of EP on FP presents aninverse-U shape. Finally, according to the analysis results and BP’s environmentalmanagement practice, this paper provides advices on environmental pollution control,environmental-relevant expenditures and environmental disclosure for BP’senvironmental financial management.