The effects of polluting behaviour, dirty energy and electricity consumption on firm performance: Evidence from the recent crises

We examine the effects of polluting behaviour, dirty energy, and electricity consumption on firms' profitability during the recent crises (climate change, 2016 oil crisis and COVID-19) using a dataset of around 40,000 Vietnamese firms from 2011 to 2020. More specifically, we study how firm-specific characteristics affect energy consumption, polluting behaviour, and profitability. Our results show that (1) dirty energy consumption has a positive impact on firm performance; (2) larger firms and firms located in industrial zones tend to exploit dirty energy more than others; (3) state-owned firms manage resources better than privately owned firms; and (4) polluting firms are more profitable. After controlling for the Paris Climate Agreement, we find smaller polluting firms are affected more intensely than other firms. We also find that electricity consumption negatively impacts firm profitability, but the impact was alleviated during the oil and COVID-19 crises. Finally, our results indicate that recent crises negatively affected firms' profitability in the electric power generation, transmission, and distribution sectors. The findings of this paper suggest that more stringent policies are required around dirty energy consumption, and these policies must target larger organisations—particularly in industrial zones.