Spatial Spillovers in Corporate Environmental Performance of European Listed Firms

This study examines whether the emissions-management performance of European listed firms is associated with geographical proximity and firm-level financial and governance characteristics. Using cross-sectional data for companies included in the STOXX Europe 600 index in 2023, the analysis combines spatial econometric models with a DBSCAN clustering approach to estimate direct and spillover effects and identify localized eco-spatial clusters. The results show significant spatial dependence and confirm that firms are more likely to achieve environmental outcomes similar to those of their neighbors operating in the same sector. Firm size, profitability, corporate social responsibility (CSR) committees, emissions reduction, and sustainability-linked executive compensation policies are positively associated with the emissions score, while CSR committees and sustainability-oriented policies also display significant spatial spillover effects. Overall, the findings are consistent with organizational learning and institutional convergence mechanisms and highlight the importance of considering localized spatial interactions when examining firms’ emissions-management performance.