Purpose The main goal of this paper is to investigate the impact of renewable energy adoption on the financial performance of non-financial corporations in the MENA region from 2015 to 2024. Design/methodology/approach The authors analyze panel data from 147 non-financial firms in the MENA region using GLS and System GMM estimators. Findings The results show that firms adopting more renewable energy achieve better financial performance, reflected in higher ROAA and market valuation. Positive effects are also associated with firm size, women in management, GRI reporting and board affiliation. In contrast, sustainability-linked compensation shows a negative impact. The analysis further reveals that the financial advantages of renewable energy adoption are further pronounced among firms committed to SDG 7 (clean energy) and SDG 13 (climate action), confirming the value of targeted sustainability strategies. Research limitations/implications These results will be useful for policy authorities aiming to boost the energy transition by highlighting the financial benefits of renewable energy adoption. They also offer perspectives for corporate decision-makers, investors and regulators, highlighting the importance of aligning governance, transparency and sustainability strategies, particularly through frameworks such as the SDGs and IFRS sustainability standards. Originality/value This study adds to the literature in three ways: it provides the first firm-level empirical assessment of renewable energy adoption and financial performance in the MENA region. Second, it incorporates SDG commitments and governance indicators, using robust econometric techniques to address endogeneity. Finally, the findings offer practical findings for firms and policymakers aiming to align energy transition goals with financial performance in emerging markets.
Benayed et al. (Tue,) studied this question.