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Author(s): Mustapha Tafida Aminu, Mona A. ElBannan.

Volume/Issue: Volume 9, Issue 1 (2026)

Page No: 1-19

Journal: African Journal of Accounting and Financial Research (AJAFR)

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Abstract:

This study examines the relationship between corporate sustainability investments, including renewable energy investments (REI), sustainable transportation (ST), and energy efficiency investments (EEI), and environmental sustainability (ES) among EU-listed firms from 2013 to 2023. The findings reveal that while these investments are associated with modest reductions in CO2 emissions, their immediate effects on environmental sustainability are limited. The study utilizes economic theory, particularly the cost-benefit analysis framework, to explain that sustainability investments are often driven by expected returns exceeding costs, but their benefits materialize over the long term. The legitimacy theory also informs the study, suggesting that firms engage in sustainability efforts not only to improve performance but also to align with social and regulatory expectations. GMM was employed to address endogeneity concerns, ensuring robust results. The study contributes to the literature by offering practical insights into how multi-faceted sustainability strategies, informed by EU regulatory frameworks like the European Green Deal and Paris Agreement, can drive long-term decarbonization, while emphasizing the need for targeted financial support, strategic long-term planning, and the integration of sustainability into core business strategies. It also highlights limitations such as the reliance on publicly available data and short-term analysis, and offers recommendations for future research and policy development in corporate sustainability. Keywords: Corporate Sustainability, Sustainability Strategy, Decarbonization, EU Countries

Keywords:

Corporate Sustainability, Sustainability Strategy, Decarbonization, EU Countries.

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