Integrating sustainability: environmental and financial performance in BRICS energy and heavy industry
Abstract
This study provides a clear and compelling analysis of how Environmental Performance (EP) drives Financial Performance (FP) in BRICS countries. It shows that strong EP reduces environmental risks, enhances value, and improves firms’ financial outcomes. Focusing on firm-level data, the study examines the EP-FP link with market reputation and competitive advantage as mediators, and thin capitalization and voluntary environmental regulation adoption as moderators. Using the Generalized Method of Moments and bootstrap- ping on 295 BRICS firms (2015–2022), the results confirm that EP positively influences both accounting- and market-based FP, with a stronger and slightly delayed effect on accounting measures. The study also finds that market reputation and competitive advantage partially mediate this relationship. Moreover, voluntary environmental regulation strengthens the EP-FP link, while thin capitalization weakens it. We found that firms with roust environmental initiatives have potential competitive strength that foster stronger reputations thus secure positive financial gains. The insights of this research underscore the significance of adopting forward- looking, sustainability-focused strategies that rise above narrow, short-term profit objectives. The findings offer valuable guidance for managers, companies, and policymakers seeking to improve environmental and financial outcomes.
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environmental performance, mediator, market reputation, competitive advantage, moderator, voluntary environmental regulation adoption, thin capitalization, BRICS, GMMHow to Cite
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