The impact of green skills and green capabilities on firms’ financial performance: A systematic literature review

Abstract

Green skills and capabilities in organisations are important enablers of net-zero transition as they determine firms’ ability to adopt sustainability as a core business strategy. This study conducts a systematic literature review of 84 scholarly articles and 7 industry publications to examine the conceptualisation of green skills and green capabilities in firms, their influence on firms’ financial performance, and the factors shaping these complex relationships. Findings reveal that the green skills and green capabilities concepts are broad and ambiguously defined, necessitating greater conceptual clarity, especially with respect to how the green skills and capabilities relate to each other. Accordingly, the study develops a framework outlining different green skill and capability typologies and their interconnections. Additionally, six key performance categories—(1) costs, (2) profitability, (3) efficiency and productivity, (4) firm growth, (5) liquidity, and (6) market performance— are identified inductively, with evidence from the literature indicating that both green skills and green capabilities positively impact each of these areas. Results suggest that while the overall effect of green skills and capabilities on financial performance is positive, several contextual factors, such as firm size, sector, and region, influence this relationship. The study highlights the most significant caveats and their implications, contributing to a more nuanced understanding of the knowledge–performance link for the net-zero transition.