Econometric Validation of Sectoral Environmental Innovation Drivers

Abstract

While traditional sustainability analyses examine firms' general environmental performance (E-Score), this metric mainly reflects the status quo of current operational emissions and resource efficiency. To evaluate long-term competitiveness amid the ecological transition, a deliberate shift toward forward-looking metrics is essential. Consequently, this empirical research focuses on the environmental innovation score, which captures a firm's future-oriented capacity to generate new market opportunities through eco-design and green technologies. The central research question investigates how corporate governance quality, social performance, and financial architecture shape environmental innovation across five distinct economic sectors (financial, consumer, energy, healthcare, and industrial). This paper employs an exploratory quantitative approach with multiple linear regression (OLS) models on disaggregated panel data of EURO STOXX 600 firms (2008–2022). This first empirical assessment shows significant sectoral heterogeneity. The statistical analysis suggests that corporate governance and social performance are not universal catalysts for green technologies. These factors are negatively associated, suggesting a potential resource trade-off: social and governance scores are significantly negatively associated with environmental innovation in the consumer and financial sectors. Investments in social programs or strict governance compliance may restrict the resources available for disruptive green technologies. Return on Assets (ROA) presents a decoupling between environmental performance and innovation. Previous work indicates that ROA drives the general E-Score in the consumer sector; this study finds it has no significant impact on environmental innovation in that same sector. Instead, ROA acts as a significant positive driver of environmental innovation in the financial sector and demonstrates a significant negative effect in the healthcare sector.