Are nearby firms getting greener? The domino effect of environmental performance in Europe.

This study investigates the extent to which the environmental performance of publicly listed European companies is shaped by financial and governance-related characteristics, while explicitly accounting for spatial interdependence. The novelty of the research lies in the integration of the ESG framework with a territorial perspective on corporate sustainability. The analysis, based on 2023 data from firms included in the STOXX Europe 600 index, employs spatial models to disentangle endogenous and exogenous spatial effects. The results reveals significant spatial dependence in environmental performance. Direct effects are associated both with financial factors, such as firm size and profitability, and with governance-related characteristics, including board gender diversity, board size, the presence of CSR committees, and the adoption of structured emission reduction policies. Spillover effects are primarily linked to governance and policy-related variables, suggesting that firms tend to emulate practices of nearly peers. These findings highlight the importance of including the territorial dimension into the design of local environmental policies and corporate sustainability strategies.