Does environmental investment pay off?—portfolio analyses of the E in ESG during political conflicts and public health crises

Abstract This paper examines the contribution of environmental investment on firm value during the Russia‐Ukraine War and Global Public Health Crisis. Using media‐based environmental scores, we investigate the performance of the emission‐reduction‐based and green‐innovation‐based portfolios. The results indicate that while engaging in environmental activities decreases firm value during the noncrisis time, it creates value when companies face market‐wide crises. Our findings suggest that environmental investment serves as a risk‐hedging vehicle for political and health crises. In addition, compared to corporate ESG disclosures, firm‐level media‐based environmental scores mitigate the endogeneity between a company's ESG disclosure policies and its firm characteristics.