This paper aims to investigate how environmental performance (EP), in terms of total greenhouse gas emissions divided among the three scopes, affects financial performance (FP) in the oil and gas industries. Moreover, the study evaluates to what extent institutional characteristics can influence this nexus. The study encompasses a sample selection of 229 companies from 24 countries operating in the oil and gas industry. Correlation and regression analysis are run to verify, firstly, the potential associations between environmental and financial performance gauged by accounting metrics. Secondly, a cluster analysis is used to group countries according to institutional factors, and a multivariate regression analysis is adopted to study the moderator role of these countries’ characteristics in the association between carbon emissions and financial performance. By expanding the previous literature, the work confers to the wide-open debate on the potential relationship between environmental performance and financial performance. Additionally, it contributes significantly by addressing the lack of research on these issues within environmentally sensitive industries such as oil and gas. Further, through our study, we provide a novelty by analysing the impact of carbon emissions on financial performance, not only in terms of total CO2 but also by breaking it down into their three principal components: Scope 1, Scope 2, and Scope 3.