Much debate has occurred in the extant literature as to whether socially re
sponsible actions undertaken by firms result in improved financial performa
nce. One key dimension of social responsibility is environmental initiative
s and programs. While the purchasing function can create value and signific
antly affect the environmental actions of a firm and its upstream supply ch
ain, no research to date has explored the effect of environmental purchasin
g on firm performance. Our research provides an initial examination of this
relationship. We combine survey and archival data to show that environment
al purchasing is significantly related to both net income and cost of goods
sold, after controlling for firm size. leverage, and primary earnings per
share. (C) 2000 Elsevier Science Ltd. All rights reserved.