Business environmental innovation and CO2 emissions: The moderating role of environmental governance

Khaldoon Albitar, Hela Borgi, Muzammal Khan, Anum Zahra

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Abstract

This paper examines the effects of environmental innovation on CO2 emissions as well as the moderating role of environmental governance in this relationship. Based on a sample of companies listed on the London Stock Exchange for the period from 2016 to 2020, the findings show that environmental innovation reduces CO2 emissions including Scope 1 and Scope 2 CO2 emissions. Likewise, our findings are associative of a moderating effect of environmental governance on the environmental innovation-CO2 emissions nexus. We argue that environmental innovation along with better environmental governance leads to a reduction in CO2 emissions. Our results hold for subsamples of firms with a strong/low environmental governance and ESG performance. Our findings offer important implications for companies and policymakers towards adopting more environmental technologies along with enhancing environmental governance to reduce CO2 emissions.
Original languageEnglish
JournalBusiness Strategy and the Environment
Early online date16 Aug 2022
DOIs
Publication statusEarly online - 16 Aug 2022

Keywords

  • CO2 emissions
  • environmental governance
  • environmental innovation
  • sustainable development

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