Powering profits: how renewable energy boosts financial performance in European non-financial companies
International Journal of Accounting & Information Management
ISSN: 1834-7649
Article publication date: 16 June 2023
Issue publication date: 19 September 2023
Abstract
Purpose
The study aims to investigate the relationship between renewable energy use and financial performance in non-financial companies in European countries.
Design/methodology/approach
This study examines a panel data set consisting of 1,919 firm-year observations of non-financial companies operating in 13 European nations, covering the period from 2014 to 2021. The study uses the ordinary least squares (OLS) and the two-stage least squares method (2SLS) as the baseline models and further enhances robustness with sub-sample analysis.
Findings
The results demonstrate a positive link between renewable energy use and financial performance, and these results hold up across different measurements, sub-sample analysis and model specifications, demonstrating their robustness. Furthermore, the results indicate that some factors such as the industry nature and environmental, social and governance (ESG) controversies have an impact on this positive association.
Practical implications
The findings are substantial for both policymakers and companies, highlighting the benefits of incorporating renewable energy into their operations for improved business success.
Originality/value
This study adds to the existing body of literature on the effect of environmental performance on a company’s success by focusing on a novel aspect – the correlation between renewable energy usage and firm performance. It responds to the recent request from researchers to investigate different aspects of sustainability, with a specific emphasis on renewable energy, which is a vital factor in reducing carbon emissions and improving financial performance.
Keywords
Acknowledgements
The authors would like to extend their sincere gratitude to Skyline University College for their support of this research project.
The authors declared that no grants were involved in supporting this work.
Conflict of interest: The authors declare that they have no conflict of interest.
Citation
Issa, A. and Hanaysha, J.R. (2023), "Powering profits: how renewable energy boosts financial performance in European non-financial companies", International Journal of Accounting & Information Management, Vol. 31 No. 4, pp. 600-622. https://doi.org/10.1108/IJAIM-03-2023-0055
Publisher
:Emerald Publishing Limited
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