Sustainability to Financial Realities: A Comparative Study of Renewable Energy's Impact on Financial Performance

This study examines the impact of renewable energy (RE) performance on companies' financial performance, primarily focusing on RE-related sustainable development goals (SDGs) and environmental factors. We analyze a sample of 2,737 companies across 47 countries from 2009 to 2018 using panel data analysis. Our results suggest that the effect of RE performance can be understood through three phases: policies adopted, targets established, and actions implemented. Interestingly, RE policies negatively impact profitability due to the substantial costs incurred by companies. Moreover, RE-related SDGs are found to affect companies' financial performance adversely. However, environmental factors demonstrate a positive and significant impact on corporate financial performance, which is observed consistently across developed and emerging countries. Furthermore, RE performance targets and actions have a significant positive impact, specifically in developed countries. This highlights the complex relationship between RE initiatives and financial outcomes, highlighting differential effects across various stages of implementation and geographic contexts.