How government contracts drive businesses to go green

New research from Professor Bin Xu finds that doing business with the US Government can lead to cleaner, greener corporate practices.

A recent study reveals that US government procurement plays a powerful role in shaping corporate environmental behaviour. Titled Government Procurement and Corporate Environmental Policies, the study investigates how government agencies, acting as customers, influence the environmental performance of their contractors. By analysing data from approximately 800 public firms in the US between 2001 and 2019, the researchers found that companies with federal government contracts consistently reported lower levels of toxic pollution than those without.

Co-authored by academics from Henley Business School, the University of Leeds and the University of International Business and Economics, China, the research shows that firms supplying goods and services to the federal government significantly reduce their toxic emissions.

Professor Bin Xu, Professor of Finance and Accounting at Henley, said:

“This research sends a clear message to business leaders. Sustainability isn’t just good for the planet, it’s becoming a critical factor in securing and maintaining government contracts. Environmental responsibility is no longer optional, it’s a competitive advantage.”

The study was published in the Journal of Financial and Quantitative Analysis.

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