This paper examines how environmental costs affect performance of firms in the financial services industries for 29 countries. We find that countries in Europe have the largest difference between ROA and environmental cost-adjusted ROA (i.e., TruROA). We also show that countries with well-developed financial markets have a higher level of total environmental costs than other countries. It appears that active transactions and business activities generate a substantial amount of indirect environmental costs for firms in the well-developed financial markets. Our regression results report that lowering environmental costs has a significant role in enhancing firm performance. Lowering environmental costs is expected to precede at least one or two years before enhancing ROA. The results, however, vary depending on the levels of the financial market development. This indicates that lowering environmental costs has a more immediate impact on firm performance in well-developed financial markets than in lessdeveloped financial markets. These results are robust even after employing various panel-data regression methods and additional performance measure. Our findings suggest that policy makers dealing with corporate sustainability management should continue to pursue an environment-centered industry policy as firms with lower environmental costs consistently perform better.