Profit and pollution: sectoral heterogeneity in Europe’s environmental–economic link

In the face of economic volatility, tightening EU sustainability regulations, and rising demand for reliable non-financial information, it remains an open question whether corporate economic performance (ECP) is aligned with corporate environmental performance (ENP). Against this background, we draw on established ECP–ENP mechanisms as an organizing framework for an exploratory sector-specific analysis of the associations between economic and environmental performance. We leverage the mandatorily disclosed emissions data from the European Pollutant Release and Transfer Register (E-PRTR) to employ a unique, cross-sectoral, international panel data set with more than 150,000 firm-year observations over the period from 2008 to 2022. Further, we develop a firm-level normalized ratio of mandatorily disclosed pollutant emissions – Corporate Pollution Intensity (CPI) – to quantify ENP. Results show substantial sectoral heterogeneity in the ECP–ENP relationship. Across several sectors, the empirical associations align more closely with managerial opportunism and negative synergy than with a universal win–win relationship. By contrast, environmental utilities, comprising water supply, waste management, and related services, display a robust positive synergy pattern. Overall, the study contributes primarily through its novel measurement-based framework, regarding the introduced CPI indicator, empirical refinement, data quality, and scale, highlighting sector-specific evidence on the financial relevance of corporate pollution intensity.