A statistical study by ICF Kaiser, a consulting firm, evaluated the environmental management systems, chemical release reductions, and environmental communications of 300 large U.S. companies to rate their level of environmental risk. The study concludes that lower perceived environmental risks corresponded to as much as a 5-percent increase in stock prices. A retrospective analysis of the performance of the stocks initially selected for the fund shows that they significantly outperformed comparable international equity funds, adding 2 to 10 percent to average returns. But most analysts still do not look at environmental performance when evaluating the growth prospects of individual companies. Linda Descano of Salomon Smith Barney points out that environmental matters are perceived in terms of risks and ethical drivers that are seldom material to the bottom line.
Impacts are hard to quantify and company comparisons even within sectors are difficult.
Business justifications for environmental investments are unclear. The magnitude of costs and the mindsets of the analysts may also explain the neglect of environmental performance. Direct environmental costs are not a big percentage of operating expenses for most companies. For a large diversified manufacturer like United Technologies, direct environmental costs add up to about half a percent of pre-tax expenses. Even UTC's energy costs are less than 1 percent of expenses at today's bargain prices.