Firm-level energy and carbon performance: Does sustainable investment matter?

Abstract

Pollution reduction is one of the important challenges confronting contemporary business and society. Firms are largely responsible for undertaking sustainable business practices and initiatives as they are major contributors to global pollution. This study empirically examines how sustainable investment influences firm energy and carbon performance. Using a sample of 23,501 firm-year observations from 2440 unique firms over the period of 2002 to 2018 in G-6 countries (Canada, France, Germany, Japan, the United Kingdom, and the United States), we demonstrate that sustainable investment leads to better energy and carbon performance without compromising financial return. Our findings are robust to alternative variables, sub-samples, and different estimation techniques. This study contributes to the global discussion on sustainability and a low-carbon economy.