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Influence of Environmental Research and Development (R&D) on the Sustainability Performance of Listed Non-Financial Firms on the Frankfurt Stock Exchange, Germany

Author

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  • Abduala A. Ali Almaryoul

    (Institute of Social Sciences, University Mediterranean Karpasis, Northern Cyprus, Mersin 10, Turkey)

  • Opeoluwa Seun Ojekemi

    (Department of Engineering, University Mediterranean Karpasis, Northern Cyprus, Mersin 10, Turkey)

Abstract

Environmental research and development (R&D) support environmental improvement by advancing cleaner technologies, improving resource efficiency, reducing emissions, and helping firms meet sustainability goals and regulatory standards. This study examines the effect of environmental R&D on firms’ environmental performance and considers whether firm characteristics, specifically age and size, moderate this relationship. Using purposive sampling based on defined inclusion and exclusion criteria, the analysis draws on data for 303 non-financial firms listed on the Frankfurt Stock Exchange between 2007 and 2024, obtained from Refinitiv DataStream. Diagnostic tests revealed cross-sectional dependence, heterogeneity, and endogeneity in the dataset. To address these issues and ensure robust estimates, the Common Correlated Effects Mean Group (CCEMG), Feasible Generalized Least Squares (FGLS), and two-step difference Generalized Method of Moments (GMM) estimators were employed. The results show that environmental R&D has a positive and significant effect on environmental performance. Firm age and size further strengthen this relationship, indicating that older and larger firms benefit more from environmental R&D initiatives. The study recommends that firms increase investment in environmental R&D to stimulate innovation, enhance sustainable practices, and improve ecological outcomes. Policymakers should also encourage eco-innovation by developing supportive regulations, offering financial incentives for green technologies, and promoting sustainable technological advancement.

Suggested Citation

  • Abduala A. Ali Almaryoul & Opeoluwa Seun Ojekemi, 2026. "Influence of Environmental Research and Development (R&D) on the Sustainability Performance of Listed Non-Financial Firms on the Frankfurt Stock Exchange, Germany," Sustainability, MDPI, vol. 18(11), pages 1-22, June.
    • Handle: RePEc:gam:jsusta:v:18:y:2026:i:11:p:5572-:d:1957433
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