Despite evidence that corporate social responsibility (CSR) is increasingly considered important by both firms and capital market participants, debates persist on the relation between CSR and firm performance. This paper seeks to address the topic by focusing on the relationship between environmental performance (EnP) and economic performance (EcP), since the question of whether it really pays to be green remains unanswered. Investments in sustainable practices need to be aligned with the aim of guaranteeing sustainable EcP, not only to meet investors' expectations but also to ensure on-going business feasibility. This study considers a panel of 998 US companies observed over the period 2003–2017 using both traditional panel data methods and an unconditional quantile regression technique. The results generally confirm a positive correlation between EnP and EcP. The empirical evidence confirms that environmental performance, measured in terms of environmental orientation and environmental innovation, positively affects economic performance in terms of returns on assets and equity. This evidence enables us to conclude that EnP works as multiplier for EcP. Green firms show better resource management ability, which allows them to reach the same EcP while exploiting fewer resources and with less capital, therefore they tend to be more efficient in generating future wealth. The results confirm the importance of adopting sustainable practices such as circular economy, not only to improve the well-being of society but also to achieve sustainable competitive advantages. To conclude, managerial and policy-making implications are discussed.
