Corporate GHG Emissions and Financial Performance: A Cross-Country Panel Analysis of Sectoral Heterogeneity in Advanced and Emerging Economies

Marco Hernandez-Vega ()
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Marco Hernandez-Vega: Banco de Mexico, 5 de Mayo Num. 18, Mexico City 06000, Mexico

JRFM, 2025, vol. 18, issue 10, 1-26

Abstract: As the urgency to address climate change intensifies, understanding the financial implications of corporate greenhouse gas (GHG) emission reduction has become critical. This study examines the relationship between emission reductions and corporate financial performance (CFP) in 468 companies across advanced and emerging market economies (EMEs) from 2010 to 2022. Using a standardized emissions score to mitigate inconsistencies in greenhouse gas (GHG) reporting, we analyze how sectoral and regional dynamics influence financial outcomes using a panel fixed-effects model. The results are mixed: emission reductions are positively associated with CFP in advanced economies and low-emitting sectors. However, companies in high-emitting industries experience a negative relationship between emission reductions and CFP. The findings underscore the need for policies and corporate strategies calibrated by sector and country development status, as the emissions–profitability relationship varies across contexts.

Keywords: climate change; ESG; firm performance; greenhouse gas emissions (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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