Revisiting firm innovation and environmental performance: New evidence from Japanese firm-level data

There is uncertainty in recent research regarding the relationship between business innovation and environmental performance. Employing matched panel data for 589 publicly listed companies from 2006 to 2014, this study investigated the relationship between innovation and CO2 emission reduction for companies in Japan. The mechanisms driving emissions reduction were also explored using multiple regression models. Results showed that investment in innovation increased labor productivity which in turn reduced energy intensity and carbon emission reductions. A heterogeneous analysis showed that the impact of research and development investment was the most pronounced for well-established businesses. Furthermore, the manufacturing sector was found to enjoy more environmental benefits from innovation due to its high energy intensity. Findings of this study highlight the importance of investment in innovation for its environmental and sustainability benefits. (C) 2020 Elsevier Ltd. All rights reserved.

Automated summary

This study examines the relationship between business innovation and CO2 emission reduction in Japan using matched panel data for publicly listed companies. The results show that investment in innovation increases labor productivity, leading to reduced energy intensity and carbon emissions, especially for well-established businesses. Additionally, the manufacturing sector benefits more from innovation in terms of environmental impact due to its high energy intensity.