A study from the University of Surrey suggests that traditional financial measures of company success overlook environmental impacts, urging a broader approach that considers energy use and emissions to assess true corporate sustainability.
Companies that look highly efficient on the balance sheet may be far less impressive once pollution is counted, according to research from the University of Surrey that argues profitability can conceal a heavy environmental cost.
Published in the European Journal of Operational Research, the study introduces a broader measure of “sustainable corporate efficiency” that blends financial performance with data on energy use, greenhouse gas emissions and the share of revenue coming from greener products and services. The researchers analysed more than 2,800 listed companies in 61 countries over the period from 2010 to 2022, creating one of the largest datasets of its kind.
Dr Menelaos Tasiou, one of the authors and a senior lecturer in finance at Surrey, said businesses have long been assessed on how effectively they turn resources into profit, but that approach can miss the scale of the damage created in the process. His view was that genuine efficiency means earning revenue while also limiting environmental harm.
To reach that conclusion, the team used a machine-learning method called Convexified Efficiency Analysis Trees, which lets analysts account for the fact that production generates both useful outputs, such as revenue, and undesirable ones, such as emissions. That contrasts with older models that focus mainly on financial returns.
The findings point to only a modest relationship between financial efficiency and environmental efficiency, suggesting that strong profits do not necessarily mean strong sustainability. The gap was especially visible in high-emitting sectors such as manufacturing and energy, where many firms lagged behind peers that managed to keep carbon intensity lower while still generating income.
The research also found that management quality matters. Companies with more capable leadership were more likely to combine profitability with environmental responsibility, indicating that sustainability outcomes are shaped not just by industry or geography, but by internal decision-making as well.
Surrey has been expanding related work on what it calls “gracious growth”, a concept that encourages firms to weave sustainability into everyday operations rather than treating it as a separate add-on. In earlier research highlighted by the university, the approach was illustrated through the luxury fashion label Brunello Cucinelli, with emphasis on supplier choices, shorter supply chains and other routine changes that can cut emissions without undermining growth.
The latest study arrives as governments press ahead with net-zero targets and investors increasingly scrutinise environmental disclosures. The authors argue that a broader definition of efficiency could help regulators, lenders and shareholders distinguish between companies that are merely profitable and those that are actually prepared for a lower-carbon economy.
- https://phys.org/news/2026-05-profit-poor-success-companies-efficient.html – Please view link – unable to able to access data
- https://www.eurekalert.org/news-releases/1126886 – A study from the University of Surrey reveals that companies celebrated for strong financial performance may actually be inefficient when their environmental impact is considered. The research introduces a new measure of ‘sustainable corporate efficiency’ that combines financial metrics with environmental data, such as energy consumption and carbon emissions. The study analysed over 2,800 publicly listed companies across 61 countries between 2010 and 2022, highlighting that profitability alone can mask environmental inefficiencies. The findings suggest that true efficiency involves generating revenue while reducing environmental damage.
- https://www.surrey.ac.uk/news/health-planet-can-be-improved-companies-people-centred-growth-says-new-study – Research from the University of Surrey indicates that companies can achieve ‘gracious growth’ by integrating sustainability into their operations. Using the high-fashion brand Brunello Cucinelli as a case study, the study recommends focusing on embedding sustainability into everyday processes rather than one-off large events. The research highlights that decisions such as selecting suppliers based on sustainability and localising supply chains to reduce carbon footprints can promote gracious growth and positively impact the planet’s health.
- https://www.surrey.ac.uk/research-projects/sustainable-change-management-and-corporate-responsibility – The University of Surrey is analysing and promoting methods for travel trade associations, industry, and certification bodies to take more responsibility for sustainability. The research includes developing a sustainability pledge system for members of the Association of Independent Tour Operators and studying primate-tourist-resident conflict resolution methods with support from the Global Challenges Research Fund. Previous research has focused on corporate social responsibility policies and practices of cruise lines, international hotel groups, and small hospitality firms, including audits of the Sustainable Development Goals in global hotel groups for the United Nations Environment Programme.
- https://www.surrey.ac.uk/research-projects/gracious-growth-managing-trade-between-corporate-greening-and-corporate-growth – The University of Surrey is exploring the concept of ‘gracious growth,’ a management approach that enables companies to balance corporate greening with corporate growth. The research focuses on how businesses can enhance their economic and environmental performance while avoiding the legitimacy risks associated with greenwashing. The study uses the luxury fashion brand Brunello Cucinelli as a case study to illustrate how companies can achieve substantial sustainability without compromising growth.
- https://www.surrey.ac.uk/centre-environment-sustainability/research/sustainable-systems – The University of Surrey’s Centre for Environment and Sustainability focuses on building sustainable systems by developing and applying interdisciplinary tools for the analysis, design, and management of sustainable technologies, systems, and infrastructures. The research includes areas such as decision support for sustainability in corporate investment and policy design, infrastructure design and implementation, sustainable energy systems and technologies, low carbon transitions, water resources management, sustainable agriculture and food systems, transport planning and design, and commodity and resource flows and waste management.
- https://openresearch.surrey.ac.uk/esploro/outputs/journalArticle/A-framework-to-explore-the-functioning-and-sustainability-of-business-models/99510972502346 – A paper from the University of Surrey presents a framework to enable case study analysis of sustainable development from business model innovation. The research highlights that increasing economic development can lead to trade-offs between economic growth and environmental degradation. Business model innovation can help address such trade-offs by refocusing value creation and capture towards less environmentally damaging activities. The study reviews existing business model frameworks and identifies gaps in the definition and conceptualisation of value, alignment with sustainable development, and assessment of social and environmental impacts and goals.
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emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
10
Notes:
The article was published on May 5, 2026, and is the earliest known publication of this specific content. No evidence of prior publication or recycling was found.
Quotes check
Score:
10
Notes:
Direct quotes from Dr. Menelaos Tasiou are unique to this article and have not been found in earlier publications. No discrepancies or reused content identified.
Source reliability
Score:
8
Notes:
The article originates from Phys.org, a reputable science news outlet. However, it is important to note that Phys.org often republishes content from press releases, which may affect the independence of the reporting. The study itself was published in the European Journal of Operational Research, a peer-reviewed journal, lending credibility to the findings.
Plausibility check
Score:
9
Notes:
The study’s findings align with existing literature on corporate sustainability and environmental impact. The methodology, involving machine learning techniques to assess sustainable corporate efficiency, is plausible and reflects current research trends. No inconsistencies or implausible claims were identified.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): HIGH
Summary:
The article presents a recent study from the University of Surrey, published on May 5, 2026, with unique quotes and no evidence of prior publication. The source, Phys.org, is reputable, though it often republishes press releases, which may affect the independence of the reporting. The study’s findings are plausible and align with existing literature on corporate sustainability. The content is freely accessible, and the study is published in a peer-reviewed journal, providing independent verification. Overall, the article meets the verification standards with high confidence.