THE NORDIC MODEL OF SUSTAINABLE VALUE CREATION: ESG, PUBLIC-PRIVATE COLLABORATION, AND MARKET PERFORMANCE ON THE PATH TO CARBON NEUTRALITY

Abstract

Although Nordic economies rank among the global leaders in sustainability and climate policy, the extent to which corporate environmental, social and governance (ESG) performance and carbon efficiency translate into market value is not well understood. This paper analyses how large listed firms in Denmark, Finland, Norway, Sweden and Iceland create sustainable value under well-established disclosure frameworks and close public-private collaboration. It investigates the relationship between ESG scores, carbon efficiency indicators and financial characteristics for 82 firms between 2021 and 2024. Cross-sectional and pooled Pearson correlations, complemented by two-sample t-tests, demonstrate the link between revenues per tonne of CO₂, enterprise value including cash (EVIC) per tonne of CO₂, greenhouse gas (GHG) emissions intensity and the presence of carbon-reduction targets, and market capitalisation, assets, leverage, profitability and capital expenditure. The results show that there is no meaningful association between conventional ESG scores and firm value or profitability. In contrast, carbon-efficiency indicators exhibit strong and consistent financial linkages. EVIC per tonne of CO₂ is highly correlated with market capitalisation, assets and, in particular, total debt (r ≈ 0.90), suggesting that the firms that are the most carbon-efficient are also the largest and most capital-intensive. Revenue per tonne of CO₂ shows a moderate but significant correlation with size variables (r ≈ 0.54–0.55). Firms with carbon-reduction targets have a market capitalisation that is almost four times higher, as well as substantially greater EBITDA and CAPEX. This confirms that climate commitments are concentrated among companies that are stronger financially. Cluster analysis reinforces these patterns: seven independent NbClust criteria identify two clusters, with almost all firms falling into a dominant cluster, which is evidence of a highly homogeneous regional sustainability–financial structure. Only a few outliers diverge significantly from this Nordic profile. Sectoral asymmetries persist, with financial, technology, and consumer-oriented firms demonstrating a capacity to translate sustainability performance into valuation gains more effectively than industrial and resource-intensive sectors. The latter face limitations in the immediate improvement of their performance due to technological and operational constraints. The findings indicate that sustainable value creation in the Nordic region is driven primarily by carbon efficiency, firm scale, and institutional capacity, underscoring the importance of targeted industrial policies and innovation programmes in helping heavy industries close the carbon-efficiency gap.