Carbon Emission and Corporate Financial Performance: an empirical study of the US Energy and Technology Sectors Navn:

Abstract

Corporate transparency and socially responsible actions, for the past decade, have become fundamental values as well as strong variables in nowadays business operations. Today, firms have to disclose more about their ESG or Environmental, Social and Governance information regarding their operations. With this empirical study, we aim to investigate the link between ESG indicators, CSR and firm performance, by focusing on the Carbon Emission and its impact on the firms’ returns. We believe the Energy and Technology sectors will give us enough diversified data which will help us to draw a realistic picture of the sectors performance in relation with the CO2 Emission. These sectors are made of a large number of listed and successful companies in the US. This approach will give us a better and more accurate understanding of the link between the general corporate financial performance and carbon footprint emissions. Thus, using multiple linear regressions, the paper found that there are significant and sufficient proofs of the CO2 Emission having an influence on the firms’ financial performance for both sectors at time t. We also wanted to see if the Carbon Emission levels at time t-1 are having an impact on the Firm Value at time t, and we discovered that there is not enough statistically significant information to support this hypothesis.