Work

Does internal carbon pricing improve firm performance? Evidence from indian listed companies

Year: 2025

Type: article

Abstract: • We examined the impact of internal carbon pricing (ICP) disclosure on the financial performance of Listed firms in India. • Results indicate positive and significant impact of ICP disclosure on firm performance. • The findings support the growing role of climate change mitigation and sustainability along with policy discussions. This study evaluates the effect of internal carbon pricing (ICP) disclosure on the financial performance of publicly listed firms in India, an emerging economy. Firm performance is measured through return on assets (ROA), return on equity (ROE), return on capital employed (ROCE), and earnings per share (EPS). Employing Panel-Corrected Standard Errors (PCSE) and two-stage least squares (2SLS), the analysis reveals consistent positive associations for ROA, ROE, and EPS, with ROCE positive but insignificant. Findings underscore ICP disclosure as a strategic sustainability mechanism that strengthens corporate accountability, enhances firm value, and informs policy debates on climate-related financial disclosure in emerging markets.

Source: Finance research letters

DOI: 10.1016/j.frl.2025.108780

Authors: V Veeravel, Rahul B. Hiremath, Pradiptarathi Panda

Institution: Indian Institute of Management Raipur

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,730