Do green initiatives and green performance affect firm performance? Empirical evidence from India

The study aims to unravel the impact of green performance and green initiatives on corporate financial performance, and also to explore and establish the relationship between specific components of green performance and financial performance. This study considers a panel dataset comprising 224 nonfinancial companies listed on NSE 500 index for the period of eight consecutive years, i.e., from 2014–2015 to 2021–2022. This study adopts both the static and dynamic panel estimations to explore the link between these variables. The estimation shows green initiatives have a positive impact on financial performance. In addition, this estimation also documents a positive impact of greenhouse gas (GHG) productivity and energy productivity (specific measure of green performance) on corporate performance. This finding provides several important suggestions for Indian companies and policymakers towards adopting more green initiatives along with improving green performance to enhance higher financial performance. This study may also help to implement green policies, which will help to minimize pollutions, and is ultimately beneficial for the whole of society as well as the environment. The novelty of the study is to provide deep understanding and bridge the knowledge gap about the relationship by considering key functional dimensions of Indian firms. In addition, specially by incorporating dynamic panel estimation, this study has controlled for potential endogeneity bias and also the dynamic effects, which are scarce in earlier literature.