Work

Turning Carbon Into Cash? Cross‐Country Evidence on the Profitability of Emission Reductions

Year: 2025

Type: article

Abstract: ABSTRACT Does corporate CO 2 abatement pay? We assembled an international panel of listed firms (2019–2023), linking Scope 1–2 emissions to institutional (G7, CCPI) and search‐based attention measures. The dataset consists of an unbalanced panel of 1724 multinational firms, together with a sub‐sample of 922 firms operating in G7 economies. Firm and time fixed effects, dynamic system‐GMM, and Granger tests indicate that reductions in operational CO 2 are followed by higher returns on assets, with larger effects in G7 markets. National climate ambition (CCPI) does not reliably amplify profitability. By contrast, the information environment moderates payoffs: in G7 economies, ecological‐risk attention amplifies the abatement–performance relationship, whereas climate‐crisis attention weakens it, despite a modestly positive main effect. Results are robust with alternative abatement measures, though a binary specification produces weaker results outside the G7. The sum of the evidence indicates that decarbonisation is a value‐creating capability whose payoff is mediated by attention rather than headline policy. Implications for managers, lenders, investors and regulators follow: credibility, disclosure quality and enforcement shape returns on cuts CO 2 .

Source: Business Strategy and the Environment

DOI: 10.1002/bse.70481

Authors: Mauro Aliano, Daniela Lo Cascio, Saudi‐Yulieth Enciso‐Alfaro, Isabel‐María García‐Sánchez

Institutions: University of Ferrara, Universidad de Salamanca

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: $4,480