IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v256y2025ics0165176525004501.html
   My bibliography  Save this article

Carbon reduction initiatives, firm innovation and firm value

Author

Listed:
  • Acheampong, Albert
  • Wang, Yan

Abstract

This study examines the impact of carbon reduction initiatives (CRI) on firm innovation and firm value. Using a sample of FTSE 350 non-financial firms from 2005 to 2023, we employ a novel text-mining approach to construct a CRI index and assess its relationship with firm’s R&D intensity and market valuation. Our findings reveal that firms engaged in CRI exhibit higher innovation output and enhanced firm value. Further findings reveal that carbon-intensive firms realise greater valuation benefits, whereas non-carbon-intensive firms exhibit stronger innovation-driven gains. These results remain robust to several further analysis and endogeneity tests. Our study contributes to the literature on corporate sustainability by highlighting the financial and technological implications of CRI. The findings offer practical insights for corporate managers, investors, and policymakers on the strategic advantages of integrating sustainability into corporate decision-making.

Suggested Citation

  • Acheampong, Albert & Wang, Yan, 2025. "Carbon reduction initiatives, firm innovation and firm value," Economics Letters, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004501
    DOI: 10.1016/j.econlet.2025.112613
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176525004501
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2025.112613?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004501. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.