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

Abstract

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.

Keywords

• meta-analysis
• firms
• greenhouse gas emissions
• financial performance
• research design
• industry effects