The Impact of Carbon Emissions on Firms’ Financial Performance: An Application in BIST Sustainability Index

Abstract

The purpose of this study is to examine the carbon emission data of the firms listed in the Borsa Istanbul Sustainability Index in Turkey and analyze the relationship between carbon emissions and the financial performance of these firms. In this research, annual data for 31 firms listed in the Borsa Istanbul Sustainability Index for the period 2017–2020 were used. The relationship between the financial performance indicators of the firms and their carbon emissions was analyzed using a random effects panel data model. The dependent variables identified were return on assets and return on equity as measures of financial performance, while carbon emissions were consid- ered as the independent variable, along with control variables such as firm size, leverage ratio, firm growth, and firm value. The research findings indicate that carbon emissions have a negative impact on both return on assets and return on equity.

Keywords

• bist sustainability index
• carbon emission
• financial performance
• panel data analysis
• sustainability reporting
• bist sürdürülebilirlik endeksi
• karbon emisyonu
• finansal performans
• panel veri analizi
• sürdürülebilirlik raporlaması