The value of green innovation is increasingly being recognized in the business world. Businesses that invest in green technologies are not only good for the environment, but for profitability too.
According to a study recently published by the Journal of Innovation Economics & Management, green investment should be seen by firms as a long-term strategy. Fatima Shuwaikh, an Assistant Professor at EMLV, and member of the Finance Group of the Devinci Research Center, is part of a research study to analyze how corporate sustainability affects environmental and financial results.
Advantages of going green
Responding to the problem of global climate change caused by greenhouse gas (GHG) emissions is a major challenge for the world. “Going green” is a critical issue in current business practices as the world strives to achieve sustainable development.
Investment in green innovation has become a vital driver in many industries today. How green innovation contributes to a firm’s environmental and financial performance remains uncertain and there is debate about this relationship.
Using data gathered from 243 firms between 2013 and 2020, this study aims to provide new evidence on this topic.
The results indicate that green innovation has a clear positive effect on environmental and financial performance in corporations striving to achieve sustainability and environmental protection.
The authors also find that green innovation mediates the relationship between environmental and financial performance. Based on their findings, they suggest that green innovation is a profitable strategy in the long run with a positive influence on the environmental and financial performances of a firm.
Driving sustainable competitive advantage
This study offers several key suggestions to policymakers and managers to encourage them to implement green innovation so as to improve environmental and financial performance.
The results suggest that investing in green innovation is beneficial for firms to boost their image with stakeholders who are demanding that firms become increasingly environmentally proactive in all their activities.
The managerial implications of this study’s findings indicate that committing to environmental business practices, such as green innovation practices, may assist companies in gaining a competitive advantage and improving their environmental and financial performance.
The adoption and implementation of such activities are driven by market demand for green activities, corporate environmental ethical practices, and stakeholder pressure.
The successful execution of environmental practices helps overcome the technological challenges of green innovation, achieves a proper balance between environmental and financial performance, and gains competitive advantage.
On a journey toward green (r)evolution
This study has several implications for decision-makers and managers as it confirms the importance of green innovation and the influence of successful implementation on financial performance.
Acknowledging the need for a green innovation strategy will help decision-makers to devise strategies and policies that advance green innovation and overcome technological challenges.
Moreover, managers can use this knowledge and the firm’s dedication to green innovation to successfully promote environmental practices in their companies and establish a corporate reputation for green performance.
Shuwaikh, F., Benkraiem, R., Dubocage, E., 2022. Investment in Green Innovation: How Does It Contribute to Environmental and Financial Performance? Journal of Innovation Economics & Management. Fnege (2) https://doi.org/10.3917/jie.pr1.0137