The Impact of Carbon Emission Intensity on Financial Performance: Evidence from the BIST Cement Sector

This study examines the relationship between carbon emission intensity and financial performance, aiming to reveal the impact of emission levels on the profitability of publicly listed companies in Türkiye. The tightening of international climate policies and the expansion of carbon pricing mechanisms generate various regulatory, technological, and market uncertainties during the transition towards a low-carbon economy. These transition risks directly affect firms’ costs and competitive positions. In this context, this study empirically tests the effect of carbon emission intensity arising from cement production on the financial performance indicators, namely, return on assets, gross profit margin, and net profit margin, of firms operating in the cement sector listed on Borsa Istanbul (BIST). The analysis employs a panel data methodology and covers the period 2016–2023, depending on data availability. The findings reveal a negative effect of carbon emission intensity on profitability indicators. These results are consistent with broader trends discussed in the literature, including expectations of rising emission-related costs in the future and investors’ increasing tendency to decarbonise their portfolios. This study contributes to the literature by examining the impact of carbon emissions on financial performance within the context of an emerging market, using carbon emission intensity as a key variable, and offering comprehensive implications for policymakers and investors. Moreover, the evidence obtained from cement-producing firms highlights the sector’s sensitivity to carbon-related risks and the implications of these risks for financial performance.