GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIA
With growing concerns about environmental degradation and its impact on global ecosystems, the Halal food industry is facing increasing scrutiny and pressure to adopt sustainable practices. This research examines the relationship between green sustainability and the financial performance of Halal fo...
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| Language: | English |
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Bank Indonesia
2024-11-01
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| Series: | Journal of Islamic Monetary Economics and Finance |
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| Online Access: | https://jimf-bi.org/index.php/JIMF/article/view/2003 |
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| author | Md Mahfujur Rahman Zaki Ahmad Mahvish Nawaz Mokal Muhamad Fikri Aziz Nor Aina Mhd Khotib |
| author_facet | Md Mahfujur Rahman Zaki Ahmad Mahvish Nawaz Mokal Muhamad Fikri Aziz Nor Aina Mhd Khotib |
| author_sort | Md Mahfujur Rahman |
| collection | DOAJ |
| description | With growing concerns about environmental degradation and its impact on global ecosystems, the Halal food industry is facing increasing scrutiny and pressure to adopt sustainable practices. This research examines the relationship between green sustainability and the financial performance of Halal food companies in Malaysia. Applying a dynamic panel modelling to a sample of 75 companies over 10 years, we document diverse effects of sustainable practices on firms’ financial performance. More specifically, we note that efficient material usage is positively associated with both Return on Assets (ROA) and Tobin's Q (TBQ). Likewise, by reducing costs and enhancing the company's public image, effective emission management boosts both ROA and TBQ. However, energy-related initiatives negatively impact both ROA and TBQ. Biodiversity efforts, although costly in the short term, contribute to improved long-term market valuation. In a similar vein, while its decreases short-term profitability, environmental sustainability positively influences market valuation. Finally, water management initiatives often lead to decreased ROA and TBQ, which possibly is related to their high costs. From the results, policymakers should support efficient material usage and emission management through incentives to enhance profitability and market valuation. Additionally, they should consider providing financial assistance for biodiversity and environmental compliance initiatives while evaluating ways to mitigate the high costs associated with energy and water management to ensure sustainable industry growth.
ACKNOWLEDGMENT
We extend our sincere gratitude to the Institute of Halal Management, Islamic Business School, University Utara Malaysia, and the Research and Innovation Management Centre (RIMC) for their invaluable support and contribution to our current research. The institutional support from both entities has greatly enriched our study, emphasizing the significance of sustainable practices in the Halal food industry. |
| format | Article |
| id | doaj-art-3f98b2ec22674784985533e2b18a2dd3 |
| institution | Kabale University |
| issn | 2460-6146 2460-6618 |
| language | English |
| publishDate | 2024-11-01 |
| publisher | Bank Indonesia |
| record_format | Article |
| series | Journal of Islamic Monetary Economics and Finance |
| spelling | doaj-art-3f98b2ec22674784985533e2b18a2dd32025-01-06T03:03:11ZengBank IndonesiaJournal of Islamic Monetary Economics and Finance2460-61462460-66182024-11-0110470973410.21098/jimf.v10i4.20032003GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIAMd Mahfujur Rahman0Zaki Ahmad1Mahvish Nawaz Mokal2Muhamad Fikri Aziz3Nor Aina Mhd Khotib4Institute of Halal Management, Islamic Business School, Universiti Utara Malaysia, MalaysiaSchool of Economics, Finance and Banking, Universiti Utara Malaysia, MalaysiaSchool of Language, Civilisation and Philosophy, University Utara Malaysia, MalaysiaIslamic Business School, Universiti Utara Malaysia, MalaysiaInstitute of Halal Management, Islamic Business School, Universiti Utara Malaysia, MalaysiaWith growing concerns about environmental degradation and its impact on global ecosystems, the Halal food industry is facing increasing scrutiny and pressure to adopt sustainable practices. This research examines the relationship between green sustainability and the financial performance of Halal food companies in Malaysia. Applying a dynamic panel modelling to a sample of 75 companies over 10 years, we document diverse effects of sustainable practices on firms’ financial performance. More specifically, we note that efficient material usage is positively associated with both Return on Assets (ROA) and Tobin's Q (TBQ). Likewise, by reducing costs and enhancing the company's public image, effective emission management boosts both ROA and TBQ. However, energy-related initiatives negatively impact both ROA and TBQ. Biodiversity efforts, although costly in the short term, contribute to improved long-term market valuation. In a similar vein, while its decreases short-term profitability, environmental sustainability positively influences market valuation. Finally, water management initiatives often lead to decreased ROA and TBQ, which possibly is related to their high costs. From the results, policymakers should support efficient material usage and emission management through incentives to enhance profitability and market valuation. Additionally, they should consider providing financial assistance for biodiversity and environmental compliance initiatives while evaluating ways to mitigate the high costs associated with energy and water management to ensure sustainable industry growth. ACKNOWLEDGMENT We extend our sincere gratitude to the Institute of Halal Management, Islamic Business School, University Utara Malaysia, and the Research and Innovation Management Centre (RIMC) for their invaluable support and contribution to our current research. The institutional support from both entities has greatly enriched our study, emphasizing the significance of sustainable practices in the Halal food industry.https://jimf-bi.org/index.php/JIMF/article/view/2003sustainability, green, halal food companies, financial performance, malaysia. |
| spellingShingle | Md Mahfujur Rahman Zaki Ahmad Mahvish Nawaz Mokal Muhamad Fikri Aziz Nor Aina Mhd Khotib GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIA Journal of Islamic Monetary Economics and Finance sustainability, green, halal food companies, financial performance, malaysia. |
| title | GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIA |
| title_full | GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIA |
| title_fullStr | GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIA |
| title_full_unstemmed | GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIA |
| title_short | GREEN SUSTAINABILITY AND FINANCIAL PERFORMANCE OF HALAL FOOD COMPANIES: EVIDENCE OF MALAYSIA |
| title_sort | green sustainability and financial performance of halal food companies evidence of malaysia |
| topic | sustainability, green, halal food companies, financial performance, malaysia. |
| url | https://jimf-bi.org/index.php/JIMF/article/view/2003 |
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