Unveiling the Dynamics of Green Innovation on ESG Performance: The Role of Financial Distress and the Impact of the Paris Agreement

Ashutosh Yadav; Bright Akwasi Gyamfi; Divine Q. Agozie; Simplice A. Asongu; Deepak Kumar Behera

doi:10.1002/tie.70042

journal article Open Access Sep 21, 2025

Unveiling the Dynamics of Green Innovation on ESG Performance: The Role of Financial Distress and the Impact of the Paris Agreement

Ashutosh Yadav

Bright Akwasi Gyamfi

Divine Q. Agozie Simplice A. Asongu

Deepak Kumar Behera

Thunderbird International Business Review · Wiley

View at Publisher Save 10.1002/tie.70042

Abstract

ABSTRACTThe field of Environmental Social Governance (ESG) investment has witnessed significant growth in recent decades, driven by the widespread adoption of “carbon neutral” efforts by most nations. Industry would prioritize ESG in a global context characterized by significant uncertainty. Companies derive advantages from the dissemination of ESG data by enhancing their brand reputation, hence attracting investment, reducing borrowing expenses, and augmenting their market value. The findings, especially from the Quantile Regression and Generalized Additive Model studies, provide interesting insights into the interactions of these variables across various industries and countries across time. We implemented a rigorous econometrics methodology that specifically targeted the most prominent corporations in terms of market capitalization in both the Chinese and European markets. Using the Thomson Reuters Eikon database, this study collected data on the top 496 firms from 2012 to 2022. From the analysis, there was a significant positive impact of GRIN on ESG scores across all quantiles, which highlighted the critical role of green innovation in enhancing corporate sustainability. Moreover, a negative relationship between financial distress and ESG was obtained from the findings. Nevertheless, the objective which focused on the period before and after the Paris Agreement underscores the policy's catalytic role in amplifying the effects of green innovation on ESG scores. Therefore, our analysis not only affirms the crucial significance of green innovation in promoting ESG performance but also reveals the complex impact of financial crisis and the magnifying effect of international policies such as the Paris Agreement on these dynamics.

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Details

Published: Sep 21, 2025
License: View

Authors

A

Ashutosh Yadav

Area of Finance and Accounting Jaipuria Institute of Management Jaipur India

B

Bright Akwasi Gyamfi

Center for Accounting Finance and Economics Multimedia University Cyberjaya Selangor Malaysia

D

Divine Q. Agozie

Department of Operations and Management Information Systems University of Ghana Business School Accra Ghana

S

Simplice A. Asongu

School of Economics University of Johannesburg Johannesburg South Africa; Tashkent State University of Economics Tashkent Uzbekistan; The Institute of Convergence Science Korea University Seoul South Korea

D

Deepak Kumar Behera

Department of Humanities and Social Sciences National Institute of Technology Patna Patna Bihar India

Cite This Article

Ashutosh Yadav, Bright Akwasi Gyamfi, Divine Q. Agozie, et al. (2025). Unveiling the Dynamics of Green Innovation on ESG Performance: The Role of Financial Distress and the Impact of the Paris Agreement. Thunderbird International Business Review. https://doi.org/10.1002/tie.70042

Unveiling the Dynamics of Green Innovation on ESG Performance: The Role of Financial Distress and the Impact of the Paris Agreement

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