Carbon Emissions and Corporate Financial Performance: A Systematic Literature Review and Options for Methodological Enhancements

Lewandowski, Stefan

doi:10.1007/978-3-319-27718-9_9

Cited by 5 publications

(22 citation statements)

References 54 publications

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“…Busch and Hoffmann, ). Moreover, an increasing body of empirical research suggests that carbon performance has a significant positive effect on corporate financial performance (Lewandowski, ). Thus, managers need to find adequate ‘corporate carbon strategies’ (Lee, ) in order to sustain or even enhance competitiveness.…”

Section: Discussionmentioning

confidence: 99%

“…(), who observe that, ‘despite increasing pressure to deal with climate change, firms have been slow to respond with effective action […] [and] many firms are failing to reduce their absolute greenhouse gas emissions, which contribute to climate change’ (p. 253). Thus, even though the majority of empirical studies suggest that good carbon performance has a significant positive effect on corporate financial performance (Lewandowski, ), companies appear to refrain from engaging in climate change mitigation.…”

Section: Introductionmentioning

confidence: 99%

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Corporate Carbon and Financial Performance: The Role of Emission Reductions

2017

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This article uses econometric techniques to examine the effect of corporate carbon performance on corporate financial performance. I extend the existing literature in this research field by differentiating between two measurement perspectives: carbon performance expressed as annually reported carbon dioxide (CO2) emission equivalents and improvements in carbon performance over time. Thereby, the article re‐addresses the research question ‘when and how does it pay to be green?’ in the context of carbon emissions and climate change mitigation. Using a nonlinear modeling technique, the findings indicate that it pays to be green for companies with superior carbon performance but not for companies with inferior carbon performance. The results also show that carbon emission mitigation is linearly and significantly positive related to return on sales (ROS) but negatively related to Tobin's q. These contradictory findings help us to understand why – in spite of growing regulatory pressure – companies have been slow to respond with effective action to tackle climate change beyond marginal efficiency improvements that correspond to ‘low‐hanging fruits’. The empirical analysis is based on an unbalanced sample of 7625 firm‐year observations covering carbon emission data (Scope 1 and Scope 2) for 1640 international firms from 2003 to 2015. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Corporate Carbon and Financial Performance: The Role of Emission Reductions

2017

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“…Various economic measures are employed to observe the influence of CCD on CFP, with the most employed are ROA, ROS, returns on equity (ROE), and Tobin's q (Lewandowski, 2015). Unfortunately, until nowadays there is no firm answer due to mixed evidence, and methods differ substantially (Lewandowski, 2015) that results are considered far from conclusive enough to be considered satisfactory (Günther et al, 2011: 279 as cited in Lewandowski, 2015). There is a possibility that CCD and CED effect on CFP might be a non-linear form (Broadstock, et al, 2018;Lewandowski, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…Unfortunately, until nowadays there is no firm answer due to mixed evidence, and methods differ substantially (Lewandowski, 2015) that results are considered far from conclusive enough to be considered satisfactory (Günther et al, 2011: 279 as cited in Lewandowski, 2015). There is a possibility that CCD and CED effect on CFP might be a non-linear form (Broadstock, et al, 2018;Lewandowski, 2015). Han et al (2016) find U-shaped curve for environmental performances and ROE relationships, which means a negative relation might occur at the early stage that will take a positive turn at the latter stage.…”

Section: Introductionmentioning

confidence: 99%

“…Han et al (2016) find U-shaped curve for environmental performances and ROE relationships, which means a negative relation might occur at the early stage that will take a positive turn at the latter stage. According to Lewandowski (2015), mixed results from market and accounting measures can be explained by the non-linear relationship between carbon emission abatement and CFP, in which emission abatement might pay off in the beginning then after reaching a certain abatement level, the effect might become negative. Thus observing the CCD effect on CFP from this perspective might obtain a broader picture than observing from a linear approach only.…”

Section: Introductionmentioning

confidence: 99%

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Climate Change Disclosure Impact on Indonesian Corporate Financial Performance

Iriyadi

Antonio

2021

Journal of Accounting and Business Dynamics

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This paper aims to observe the impact of climate change disclosure (CCD) towards corporate financial performance (CFP) proxied by returns on assets (ROA), return on sales (ROS), and sales growth. Linear and non-linear approaches are employed for this research. Recommendation from Task Force on Climate-Related Financial Disclosures (TCFD) are applied for content analysis to obtain CCD scores. The target population in this study is 45 best performing companies (LQ45) listed on the Indonesia Stock Exchange (IDX) that disclosed sustainability report from 2014 to 2018. The number of observations is 72 year-companies. The findings show that CCD in large companies decreases ROS and improves ROA, yet in general, the improvement occurs in the long term for ROA and sales growth after a certain level is met (U-curve). In general, providing climate-related information will eventually pay. Financial improvement of the companies has increased despite of low quality of CCD and an indication of positive customer reaction to CCD is noticeable.

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A meta-analysis of the relationship between companies’ greenhouse gas emissions and financial performance

Galama

Scholtens

2021

Environ. Res. Lett.

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We study how the business and economics literature investigates how companies' greenhouse gas (GHG) emissions relate to their financial performance. To this extent, we undertake a meta-analysis to help us gauge the role of using highly different constructs and measurement techniques employed in this literature. Our study includes 74 effect sizes from 34 studies, covering 107 605 observations for the period 1997-2019. We establish a significant association between corporate GHG emissions and financial performance. It shows that companies with lower emissions have better financial performance. We find that the type of emission or financial performance indicator is not significant. The industry to which the firms in the sample studies belong does seems to matter slightly. We further establish that the relationship between GHG emissions and financial performance is especially pronounced for firms operating in countries with the most stringent carbon policies.

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Carbon Emissions and Corporate Financial Performance: A Systematic Literature Review and Options for Methodological Enhancements

Cited by 5 publications

References 54 publications

Corporate Carbon and Financial Performance: The Role of Emission Reductions

Corporate Carbon and Financial Performance: The Role of Emission Reductions

Climate Change Disclosure Impact on Indonesian Corporate Financial Performance

A meta-analysis of the relationship between companies’ greenhouse gas emissions and financial performance

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