How Environmental Assurances and Certifications Shape Environmental Scores and Their Relationship with Environmental Controversies: Evidence from the Main European Union Companies

Abstract

This study examines whether environmental assurance and environmental management certifications are associated with subsequent environmental performance and reputational exposure in European Union listed firms. Using Refinitiv Eikon panel data for 441 firms (1773 firm-year observations) from 2017–2023, we analyze environmental pillar sub-scores (Emissions, Resource Use, and Innovation) and three intensity indicators (energy, pollution, and recycled waste intensity). We estimate firm fixed-effects models for performance outcomes and Firth’s logistic regression models for media-reported environmental controversies, using lagged assurance/certification indicators. Environmental assurance is consistently associated with higher environmental sub-scores and with lower energy and pollution intensity, alongside higher recycled waste intensity. In contrast, certification effects are weaker and more heterogeneous across intensity-based indicators. Regarding reputational exposure, assured firms show a higher likelihood of subsequent media-reported environmental controversies, which is consistent with heightened scrutiny and visibility rather than evidence of intent. These findings inform boards, assurance providers, investors, and policymakers seeking to strengthen the credibility and use of corporate environmental information.