Business Research Proceedings

Abstract

This study examines whether environmental performance influences market risk and market performance in green construction companies. Using a sample of 96 publicly listed green construction firms across Europe, environmental performance is measured through the Environmental Pillar Score, while financial outcomes are captured by beta, earnings volatility, and total return. Ordinary least squares regressions with robust standard errors are employed, including linear and nonlinear specifications, with additional robustness checks using sector fixed effects. The findings show that stronger environmental performance is positively associated with stock returns, suggesting that firms with better environmental profiles benefit from improved market valuation. No significant relationship is found between environmental performance and either systematic risk or earnings volatility. The results also provide no evidence of nonlinear effects. These findings indicate that, in green construction companies, environmental performance functions primarily as a value-creation mechanism rather than a risk-reduction tool. The study contributes to the sustainability and finance literature by providing sector-specific evidence on how environmental performance is reflected in market outcomes.