Carbon reduction initiatives, firm innovation and firm value

Acheampong, A ORCID: https://orcid.org/0000-0002-9489-5751 and Wang, Y ORCID: https://orcid.org/0000-0001-5438-4255, 2025. Carbon reduction initiatives, firm innovation and firm value. Economics Letters, 256: 112613. ISSN 0165-1765

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Abstract

This study examines the impact of carbon reduction initiatives (CRI) on firm innovation and firm value. Using a sample of FTSE 350 non-financial firms from 2005 to 2023, we employ a novel text-mining approach to construct a CRI index and assess its relationship with firm’s R&D intensity and market valuation. Our findings reveal that firms engaged in CRI exhibit higher innovation output and enhanced firm value. Further findings reveal that carbon-intensive firms realise greater valuation benefits, whereas non-carbon-intensive firms exhibit stronger innovation-driven gains. These results remain robust to several further analysis and endogeneity tests. Our study contributes to the literature on corporate sustainability by highlighting the financial and technological implications of CRI. The findings offer practical insights for corporate managers, investors, and policymakers on the strategic advantages of integrating sustainability into corporate decision-making.

Item Type:	Journal article
Publication Title:	Economics Letters
Creators:	Acheampong, A. and Wang, Y.
Publisher:	Elsevier
Date:	October 2025
Volume:	256
ISSN:	0165-1765
Identifiers:	Number Type 10.1016/j.econlet.2025.112613 DOI S0165176525004501 Publisher Item Identifier 2505151 Other
Divisions:	Schools > Nottingham Business School
Record created by:	Jonathan Gallacher
Date Added:	30 Sep 2025 14:13
Last Modified:	30 Sep 2025 14:13
URI:	https://irep.ntu.ac.uk/id/eprint/54476

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