Hang the low-hanging fruit even lower - Evidence that energy efficiency matters for corporate financial performance

Abstract Energy efficiency measures are often called low-hanging fruit. First, they significantly lower the energy consumption and therefore contribute to combat global warming. Second, they are considered short-term and cost-effective investments. However, there still exists a gap between existing profitable investments to increase energy efficiency and the corporate reality where organizations do not implement these measures, the so-called energy efficiency gap. This analysis aims to prove that an increasing level of corporate energy efficiency is directly related to an improved corporate financial performance. The study bases on a multiple regression analysis and considers the manufacturing industry worldwide. Findings indicate a significant positive link. Hence, the study reveals that managers should pay more attention to the implementation of energy efficiency measures, even though they incorporate investment costs. The analysis further contributes to recent research as it takes into account the impacts on corporate financial performance from activities along the corporate value chain. The regression model specifically includes the nine activities of the corporate value chain as variables to control for effects on corporate financial performance. Since gained results provide a higher predictive power, the study calls future research to explicitly consider specific value chain activities when analyzing impacts on corporate financial performance.