Energy transition and non-energy firms’ financial performance: Do markets value capability-based energy transition strategies?

Energy transition has become a major challenge that will shape the global agenda in the coming decades. In addition to governments and major energy firms, non-energy firms also play a significant role in the energy transition with their growing share in renewable energy supply and other pro-environmental investments. Using the Resource-based View and Dynamic Capabilities perspectives, we discuss non-energy firms’ capability-based energy transition strategies and explore the channels through which these strategies affect their financial performance. We test our hypotheses using S&P 500 firms’ data and show that capability-based energy transition strategies have had a positive moderating effect on the relationship between the renewable energy sector performance and non-energy firms’ financial performance in the short term. Furthermore, these strategies have had a positive moderating effect on the relationship between fossil fuel prices and non-energy firms’ financial performance in the long term. Our findings indicate that capability-based energy transition strategies created a virtuous investment–return opportunity for non-energy firms between 2009 and 2021.