On the Path to Net Zero: The Effect of Greenhouse Gas Emissions and Green Innovation on CVC

Abstract

Against the backdrop of the decarbonization of the world, this paper aims to analyze the impacts of greenhouse gas (GHG) emissions, as a proxy for environmental performance, as well as green innovation on corporate investors’ financial performance. The sample consists of 133 U.S. firms with corporate venture capital (CVC) activity between 2002-2019. The findings reveal that both environmental performance and green innovation positively affect corporate investors’ financial performance. Moreover, the combined effect of environmental performance and green innovation on financial performance is examined, suggesting a positive relationship. These findings contribute to the ongoing debate on the role of corporations in reaching net zero emissions. The results of this study indicate that corporate investors should have a financial interest to reduce their emissions and drive green innovations.