Speaker
Description
This study investigates the role of corporate human capital investments in aligning financial and environmental performance in carbon-intensive industries. Grounded in established theoretical frameworks, it posits that firms can concurrently enhance carbon efficiency and financial outcomes through human capital investments. A novel human capital investment index is developed using the entropy weighting method, integrating the multidimensional nature of human capital inputs – training, compensation, satisfaction, and sustainability-linked incentives – across a global sample of 874 firms in 15 carbon-intensive industries over the 2019–2023 period. Employing a multi-method empirical framework – including two-stage least squares (2SLS), autoregressive distributed lag (ARDL) models, mediation analysis, and panel threshold regression – the analysis reveals a statistically significant, non-linear relationship between human capital investments and carbon-adjusted profitability. Specifically, human capital investments exhibit a positive long-run marginal effect on firm-level financial performance per unit of CO₂ emissions. However, the relationship is characterized by threshold effects, where returns diminish beyond certain levels of investment intensity. Mediation analysis reveals that the resources rate of return partially mediates this relationship, though not uniformly – suggesting that human capital influences carbon-adjusted performance both directly and via efficiency-enhancing mechanisms. This study contributes to the sustainability finance literature by introducing an entropy-weighted index that captures the firm-level complexity of human capital investments, empirically validating the mediating role of resources efficiency and identifying non-linear dynamics in the impact of human capital on carbon-adjusted performance. These insights offer actionable implications for firms operating in emission-intensive sectors seeking to navigate decarbonization pathways while preserving financial viability.
