Achieving net-zero emissions requires not only technological innovation but also effective governance mechanisms that can support and enhance corporate sustainability initiatives. While prior studies have examined the individual effects of green innovation and governance practices on environmental performance, limited evidence exists regarding their combined influence on corporate carbon emissions. This study investigated the relationship between green innovation, sustainable governance, and carbon emissions among Euronext-listed firms. Using a panel dataset of 304 companies covering the period 2017–2023, the study employed OLS regression models with industry and year fixed effects and conducted two-step system GMM estimation as a robustness test. The study examined the effects of green innovation and sustainable governance on total, direct (Scope 1), and indirect (Scope 2) carbon emissions while accounting for firm-specific characteristics and potential endogeneity concerns. The results revealed a significant negative association between green innovation and corporate carbon emissions, indicating that firms with stronger green innovation performance tend to exhibit lower levels of total, direct, and indirect emissions. Furthermore, the interaction between green innovation and sustainable governance is negative and statistically significant, suggesting that sustainable governance is associated with a stronger emissions-reducing effect of green innovation. These findings provide evidence that green innovation and sustainable governance function as complementary organizational capabilities that contribute to corporate decarbonization. The study contributes to the sustainable finance and corporate sustainability literature by highlighting the importance of integrating innovation strategies with governance mechanisms to improve environmental performance and accelerate progress toward net-zero objectives. The findings offer practical implications for corporate managers, investors, and policymakers seeking effective pathways to support long-term sustainability and climate-related goals.
Citation: Shih-Wei Wu, Kokulnathan Thangavelu, K B Keerthana. 2026: Green innovation and corporate decarbonization: The moderating role of sustainable governance in Euronext-listed companies, Green Finance, 8(4): 702-724. doi: 10.3934/GF.2026025
Achieving net-zero emissions requires not only technological innovation but also effective governance mechanisms that can support and enhance corporate sustainability initiatives. While prior studies have examined the individual effects of green innovation and governance practices on environmental performance, limited evidence exists regarding their combined influence on corporate carbon emissions. This study investigated the relationship between green innovation, sustainable governance, and carbon emissions among Euronext-listed firms. Using a panel dataset of 304 companies covering the period 2017–2023, the study employed OLS regression models with industry and year fixed effects and conducted two-step system GMM estimation as a robustness test. The study examined the effects of green innovation and sustainable governance on total, direct (Scope 1), and indirect (Scope 2) carbon emissions while accounting for firm-specific characteristics and potential endogeneity concerns. The results revealed a significant negative association between green innovation and corporate carbon emissions, indicating that firms with stronger green innovation performance tend to exhibit lower levels of total, direct, and indirect emissions. Furthermore, the interaction between green innovation and sustainable governance is negative and statistically significant, suggesting that sustainable governance is associated with a stronger emissions-reducing effect of green innovation. These findings provide evidence that green innovation and sustainable governance function as complementary organizational capabilities that contribute to corporate decarbonization. The study contributes to the sustainable finance and corporate sustainability literature by highlighting the importance of integrating innovation strategies with governance mechanisms to improve environmental performance and accelerate progress toward net-zero objectives. The findings offer practical implications for corporate managers, investors, and policymakers seeking effective pathways to support long-term sustainability and climate-related goals.
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Shih-Wei Wu, Kokulnathan Thangavelu, K B Keerthana. 2026: Green innovation and corporate decarbonization: The moderating role of sustainable governance in Euronext-listed companies, Green Finance, 8(4): 702-724. doi: 10.3934/GF.2026025
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