Sector and Country Effects of Carbon Reduction and Firm Performance

Previous studies have indicated a positive association between carbon reduction and firm performance. Using a dataset covering firms across 10 sectors and 53 countries over the period 2004–2019, we add to the literature by showing the differences between sectors and various groupings of countries on carbon reduction and firm performance in terms of the return on assets, the return on equity and the return on sales, as well as the Tobin’s Q and the current ratio. The services sector shows a positive result in relation to most of the corporate financial performance variables. The results also provide evidence for a negative relationship for agricultural and mining firms. The findings indicate that differences in carbon reduction are limited when allowing for various ways of grouping countries.