A sand cone model of sustainability performance: an empirical analysis

The purpose of this paper is to shed light on the relationship between environmental, social and financial performance. In particular, based on the literature, we hypothesise the existence of a ‘sand cone’ model of sustainability that implies cumulative and sequential effects among the three performance dimensions. The hypothesis is tested using the fixed effects model on a longitudinal dataset of secondary data covering the period 2010–2019. The dataset includes 661 companies operating in the manufacturing industry and located in Europe, North America and Asia. The findings show that environmental, social and financial performance do not conflict but cumulate. The sequence of performance improvements that outlines a ‘sand cone’ starts with environmental sustainability and ends with financial performance, while social performance fully mediates the relationship between the two. Any other sequence is not confirmed by the data. These results are however valid only in Western countries (i.e. Europe and North America). Based on these findings, this research informs managers that the three pillars of sustainability have a cumulative effect, but only if a specific implementation sequence is followed. However, managers should be aware that these cumulative effects need some time to show up.