TY - JOUR

T1 - Carbon performance and corporate financial performance during crises

T2 - Evidence from the COVID-19 pandemic and the Global Financial Crisis

AU - Läger, Frederic

AU - Bouzzine, Yassin Denis

AU - Lueg, Rainer

N1 - Publisher Copyright: © 2024 The Author(s). Journal of Industrial Ecology published by Wiley Periodicals LLC on behalf of International Society for Industrial Ecology.

PY - 2024

Y1 - 2024

N2 - Economic crises offer a valuable perspective on the relationship between carbon performance and corporate financial performance (CFP). Crises test corporate performance and challenge the allegedly universal synergies that developed under “normal” circumstances. However, the current research in this area is limited and has often yielded insignificant results. Drawing from a global dataset spanning 15 years, we investigate the moderating influences of two distinct crises on the interplay between carbon emission intensity and CFP. Employing fixed-effects regression analysis, we dissect these critical periods, offering nuanced insights into their distinct impacts. The contrasting nature of the Global Financial Crisis (GFC) and the COVID-19 pandemic is central to this study. The COVID-19 pandemic, characterized by operational disruptions and natural resource scarcities (supply-side shock), significantly amplified the benefits of carbon reduction strategies, highlighting the value of efficient processes and cost efficiencies. In contrast, the GFC did not exhibit a significant impact on the carbon–CFP relationship. This differentiation is attributed to the GFC's finance-driven nature (demand-side shock), and the resultant evolution in stakeholder preferences and organizational structures. This study extends beyond the debated territory of environmental, social, and governance (ESG) scores. It also provides a nuanced understanding of carbon performance's role subject to the unique characteristics of a crisis.

AB - Economic crises offer a valuable perspective on the relationship between carbon performance and corporate financial performance (CFP). Crises test corporate performance and challenge the allegedly universal synergies that developed under “normal” circumstances. However, the current research in this area is limited and has often yielded insignificant results. Drawing from a global dataset spanning 15 years, we investigate the moderating influences of two distinct crises on the interplay between carbon emission intensity and CFP. Employing fixed-effects regression analysis, we dissect these critical periods, offering nuanced insights into their distinct impacts. The contrasting nature of the Global Financial Crisis (GFC) and the COVID-19 pandemic is central to this study. The COVID-19 pandemic, characterized by operational disruptions and natural resource scarcities (supply-side shock), significantly amplified the benefits of carbon reduction strategies, highlighting the value of efficient processes and cost efficiencies. In contrast, the GFC did not exhibit a significant impact on the carbon–CFP relationship. This differentiation is attributed to the GFC's finance-driven nature (demand-side shock), and the resultant evolution in stakeholder preferences and organizational structures. This study extends beyond the debated territory of environmental, social, and governance (ESG) scores. It also provides a nuanced understanding of carbon performance's role subject to the unique characteristics of a crisis.

KW - carbon disclosure

KW - carbon performance

KW - corporate financial performance

KW - corporate social responsibility

KW - corporate sustainability

KW - scope 1 emissions

KW - Management studies

UR - http://www.scopus.com/inward/record.url?scp=85213731340&partnerID=8YFLogxK

U2 - 10.1111/jiec.13603

DO - 10.1111/jiec.13603

M3 - Journal articles

AN - SCOPUS:85213731340

JO - Journal of Industrial Ecology

JF - Journal of Industrial Ecology

SN - 1088-1980

ER -