Purpose The purpose of this study is to assess the eco-efficiency of universities in the UK and investigate the impact of critical financial indicators on environmental performance. This is particularly relevant in the context of institutions that are seeking to balance financial sustainability with climate commitments. Design/methodology/approach Using data from the entire population of 160 British higher education institutions from 2015 to 2021, a two-stage empirical methodology is implemented. Institutional eco-efficiency is evaluated through Data Envelopment Analysis during the initial phase. Quantile regression analysis is used in the second stage to examine the impact of financial indicators, such as profitability, liquidity and operational cash flow, on eco-efficiency across various performance quantiles. Findings The findings of this study suggest that universities in Wales consistently exhibit increased eco-efficiency, which is attributed to their investment in low-carbon initiatives and their implementation of comprehensive sustainability strategies. Conversely, institutions situated in densely urbanized regions, such as London, operate less efficiently because of restricted space for green infrastructure and elevated emissions. The results of quantile regression indicate that eco-efficiency is positively correlated with liquidity and operational cash flow, particularly among institutions that perform better. This underscores the critical role of sound financial management in the pursuit of environmental objectives. Research limitations/implications This study is limited to higher education institutions in the UK and does not consider the differences in funding structures, environmental policies or regulatory environments that exist across different countries. Furthermore, comparative analyses across various higher education systems could be investigated in future research. Practical implications The results of this study indicate that financial resilience is a critical factor in the enhancement of environmental performance in higher education. To facilitate sustainable institutional transformation, university leaders and policymakers are encouraged to integrate financial management with environmental strategy. Originality/value This study conceptualizes eco-efficiency as a resource-based capability, thereby extending the Natural Resource-Based View to the higher education context. This study contributes to the literature on sustainable higher education by providing innovative insights into the ways in which financial performance can influence environmental outcomes in universities, both theoretically and practically.
Ragazou et al. (Tue,) studied this question.