Eco-Innovation and Corporate Environmental Performance: Evidence from G20 countries

Abstract

This study examines the impact of eco-innovation on corporate environmental performance by using a sample of publicly listed firms from G20 countries during the period 2002–2022. My research provides a comprehensive analysis by examining four aspects of corporate environmental performance, including energy consumption, water withdrawal, carbon emission, and waste generation, and using four alternative measures of eco-innovation, namely R&D investment, environmental innovation score, process innovation, and product innovation proposed in the recent literature. Overall, I find that at the firm level, eco-innovation has a positive impact on corporate environmental performance by reducing all its four aspects. In addition, the findings are more pronounced for R&D investment, environmental innovation score and product innovation suggesting their relative effectiveness in measuring eco-innovation and reducing firms’ environmental impacts. The findings are robust to alternative model specifications, econometric methods, and the addition of control variables such as country and board characteristics.