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Does green innovation damage financial performance of oil and gas companies?

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  • Aastvedt, Tonje Marthinsen
  • Behmiri, Niaz Bashiri
  • Lu, Li

Abstract

This article investigates the effect of green innovation on financial performance of oil and gas companies. Using environmental pillar and environmental innovation scores to measure green innovation, the study estimates two panel datasets for the US and European oil and gas companies from 2010 to 2018. The results show that innovation score has a positive effect on financial performance of the US and European companies. The effect of environmental pillar score is not linear. In the US, at low level of environmental pillar score, there is a positive effect and at higher levels the effect turns to negative. In Europe, at low level of environmental pillar score, there is a negative effect, which turns positive at higher levels. Moreover, for European companies, higher crude oil prices negatively moderate the relationship between innovation score and financial performance. This result is important for policy makers to create more effective regulations and support systems. Furthermore, it is important for managerial board of companies to decide about the level of their green investment to develops their environmental performance while maintaining their desired financial performance.

Suggested Citation

  • Aastvedt, Tonje Marthinsen & Behmiri, Niaz Bashiri & Lu, Li, 2021. "Does green innovation damage financial performance of oil and gas companies?," Resources Policy, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:jrpoli:v:73:y:2021:i:c:s0301420721002464
    DOI: 10.1016/j.resourpol.2021.102235
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    7. Zhongfei Chen & Yu Xiao & Kangqi Jiang, 2023. "Corporate green innovation and stock liquidity in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 1381-1415, April.
    8. Agnes Horvath & Adrienn Takacs Papp, & Katalin Liptak & Laszlo Molnar & Klara Szucs Markovics & Ioana Manafi & Zoltan Musinszki, 2022. "Decarbonisation and financial performance of energy companies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 701-701, August.
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