The effect of environmental performance on financial debt. European evidence

Fernández-Cuesta, Carmen; Castro, Paula; Fernández, María Teresa Tascón; Castaño, Francisco J.

doi:10.1016/j.jclepro.2018.09.239

Cited by 63 publications

(46 citation statements)

References 57 publications

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“…Fujii et al [9] show that firms with lower emissions had better profitability and a higher capital turnover. Fernández-Cuesta et al [10] found that firms with a better carbon performance were able to obtain more long-term financial debt to finance their environmental investments. Gallego-Alvarez et al [11] found that during times of economic crisis, the synergy between environmental and financial performance is higher, indicating that firms must invest in sustainable projects to enhance their relationship with stakeholders even during crisis times.…”

Section: Introductionmentioning

confidence: 99%

Carbon Emissions Reduction and Corporate Financial Performance: The Influence of Country-Level Characteristics

2021

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Using a cross-country dataset covering 9265 observations on 1785 firms representing 53 countries over the period 2004–2019, this study investigates the relation between carbon emissions reduction and corporate financial performance (CFP). We perform OLS regressions with fixed effects. We found that carbon emissions reduction increases the return on assets, the return on equity, and the return on sales, whereas it has no effect on the Tobin’s Q and the current ratio. The positive relationship with the return on assets is stronger for firms with a higher responsibility score. We study country characteristics by modeling GDP growth, overall emissions within a country, and the presence of carbon emissions legislation. Our results indicate that the overall carbon emissions of a country and the presence of carbon emissions legislation are related to both corporate carbon emissions reduction and CFP. Moderating effects of the country’s overall emissions and the presence of carbon emissions legislation do not affect the relationship between carbon emissions reduction and CFP. Despite the further understanding gained, the issue of whether it “pays to be green” can still not be resolved well.

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Section: Introductionmentioning

confidence: 99%

Carbon Emissions Reduction and Corporate Financial Performance: The Influence of Country-Level Characteristics

2021

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“…Kumar and Firoz [27] explored how CO 2 emissions affect the COD and debt financing of Indian enterprises and found that highly polluting enterprises have larger debt-financing costs. Fernández-Cuesta et al [28] found that the firms' efforts of CO 2 emissions reduction can decrease their financial debt. Kempa et al [29] empirically explored the distinctions between the COD of renewable and non-renewable energy enterprises.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Firms from advanced economies face the pressure from environmental regulatory authorities. Carbon reduction has become an important business [28,72]. Private financing is becoming increasingly important for the diffusion of renewable energy.…”

Section: Private Debt Financing Of Fossil Fuelsmentioning

confidence: 99%

Drivers of CO2 Emissions: A Debt Perspective

Zhao

Liu

2022

IJERPH

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CO2 emissions and debt accumulation are twin threats to sustainable development. To fill the gap that few studies can untangle the reasons behind CO2 emissions from the debt perspective, we illustrate debt can cause CO2 emissions through various channels. We then examined how debt-based drivers impact emission trajectories. We use the logarithmic mean Divisia index (LMDI) method to decompose the emission changes into five factors. We make decomposition analyses between different country groups to identify their respective characteristics. Further, to investigate the potential financial crisis impacts, we consider the full period 2001–2019 and two sub-periods (pre- and post-2008). The results show that the gross domestic product (GDP) is always the biggest contributor to emissions, whose effect on advanced economies saw a bigger decrease after 2008 than that on emerging economies. Debt–GDP is second only to GDP in contributing to emissions. It has a similar impact on emissions before and after 2008 for advanced economies, while it rockets after 2008 for emerging economies. Private debt financing of fossil fuels is the prominent inhibitor for both economies, especially for emerging economies. It has a stronger mitigation impact after 2008 than before for emerging economies, while has the opposite change for advanced economies. Debt structure and fossil CO2 intensity have relatively smaller effects on emissions. The crisis is an opportunity to promote low-carbon development. Since the COVID-19 pandemic is analogous to the 2008 crisis in terms of debt level and emission change, we provide recommendations for emission mitigation in the post-pandemic context.

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“…Pätäri, Arminen, Tuppura, and Jantunen () perform a regression for the energy industry in order to analyze Granger causality between corporate social responsibility and corporate FP. Also, Rezende et al () and Fernández‐Cuesta, Castro, Tascón, and Castaño () used panel regression analysis to evaluate the role of green innovation intensity on FP. The first with data from 356 multinationals firms and the second with all listed firms included in the main stock index of 16 European countries.…”

Section: Literature Reviewmentioning

confidence: 99%

The relationship between emissions reduction and financial performance: Are Portuguese companies in a sustainable development path?

Robaina

Madaleno

2019

Corp Soc Responsibility Env

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Companies are increasingly adopting strategies that simultaneously reduce their negative impact on the environment and minimize the extraction of natural and energy resources, used as inputs in their production process. The concern for the sustainable development of countries and regions and environmental sustainability of companies is increasingly present. Nevertheless, does it make up for the increased costs to protect the environment? The objective of this study is to evaluate how the environmental performance (EP) and the financial performance (FP) of companies are related, applying to the specific case of Portuguese companies during the 2008-2016 period.The relationship between pollution and FP reveals to be positive. Still, firms regard EP as additional costs, and these efforts do not seem to be strong enough to lead to a better FP. Both munificence and resource slack are included and reveal to have positive effects over FP and in the EP-FP relationship. Highlights• Pollution and financial performance relationship is positive (negative EP-FP link).• Environmental performance are additional costs; firms favor financial performance.• Munificence and slack have positive effects over financial performance.• Munificent environments provide an opportunity for environmental investments.• Scarce slack resources: less willingness to undertake social-responsible actions. K E Y W O R D S environmental munificence, environmental performance, environmental sustainability, financial performance, Portuguese companies, resource slack

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The effect of environmental performance on financial debt. European evidence

Cited by 63 publications

References 57 publications

Carbon Emissions Reduction and Corporate Financial Performance: The Influence of Country-Level Characteristics

Carbon Emissions Reduction and Corporate Financial Performance: The Influence of Country-Level Characteristics

Drivers of CO2 Emissions: A Debt Perspective

The relationship between emissions reduction and financial performance: Are Portuguese companies in a sustainable development path?

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