Abstract
PurposeThis study primarily examines the link between carbon and financial performance in the Asia-Pacific region. In addition, the study also explores how the economic impact of carbon performance varies in carbon-intensive and non-carbon-intensive industries.Design/methodology/approachThis study takes a sample of 1,539 non-financial firms from 13 Asia-Pacific countries from 2014 to 2021. It employs a firm-fixed effect panel regression model to examine the objective.FindingsThe findings indicate that carbon performance improvement enhances accounting-based and market-based financial performance. The positive impact of carbon abatement stems from increased operational efficiency, energy efficiency and lower production costs. Further, the stock market participants also reward the firm for carbon efficiency. However, the carbon intensity of industrial sectors presents a conflicting picture for this association.Originality/valueThis study adds insights to the literature by providing a contemporary reflection on the nexus between carbon emissions and economic outcomes in the understudied Asia-Pacific region. It also unveils the nuanced difference in the carbon-financial performance relationship attributed to industries' carbon sensitivity.