The research team framed their inquiry around a gap in the existing literature. Most empirical studies of corporate sustainability have focused on how ESG performance relates to profitability or market value, leaving dividend policy largely unexplored. Dividends, however, are where a company’s financial health becomes tangible for its owners: they represent cash returned to shareholders rather than retained or reinvested. Whether a firm chooses to distribute that cash, and how much, reflects management’s confidence in future earnings, its exposure to risk, and the quality of its investment opportunities. By asking whether sustainability credentials influence this decision, the researchers tapped into a live debate about whether environmental responsibility competes with shareholder returns or reinforces them. Their answer, drawn from five years of firm-level data in a rapidly developing economy, leans decisively toward reinforcement.

Methodologically, the study is more sophisticated than a simple correlation exercise. Because dividend decisions are notoriously sticky, companies that paid generous dividends last year tend to pay them again this year, the authors employed a two-step system generalized method of moments, or system GMM, dynamic panel model. This econometric technique is designed for exactly this kind of problem: it accounts for the persistence of dividend behavior over time by including lagged dividends as an explanatory variable, and it uses internal instruments to address the endogeneity that plagues simpler regressions, where causality might run in either direction. The dataset comprised 165 firm-year observations, with dividend policy measured through two complementary indicators: dividend yield, which expresses payouts relative to share price, and the dividend payout ratio, which expresses them relative to earnings. Control variables included firm size, profitability, leverage, liquidity, and the lagged dividend itself, allowing the sustainability variables to be evaluated on a like-for-like basis against the established drivers of payout decisions.

The headline finding is that ESG performance exerts a considerable positive influence on dividend policy. In other words, energy companies that scored higher on environmental, social, and governance metrics tended to return more cash to their shareholders, whether measured by yield or payout ratio. This result challenges the old argument that spending on sustainability starves shareholders of returns. Instead, it suggests that strong ESG performance signals well-managed, lower-risk firms whose cash flows are more reliable, giving management both the confidence and the capacity to distribute earnings. In an industry where regulatory scrutiny, community relations, and environmental liabilities can make or break a project, a high ESG standing may function as a kind of insurance policy, reducing the volatility that would otherwise push managers to hoard cash.

Carbon emission intensity told the opposite story. Firms that emitted more carbon dioxide relative to their output paid significantly less in dividends, a pattern the researchers interpret as evidence that high environmental risk hinders payouts. The logic is intuitive: carbon-heavy companies face mounting exposure to carbon pricing, tightening regulation, stranded assets, and shifting investor preferences, all of which make future cash flows less certain. Rational managers respond by retaining earnings as a buffer against these risks rather than committing to distributions they might later have to cut. The finding carries particular weight in Indonesia, where the energy sector sits at the heart of national development strategy and where the transition away from fossil fuels raises profound questions about which companies will remain profitable, and creditworthy, in the decades ahead.

Perhaps the most striking result concerns green capital expenditure, the money firms spend on environmentally beneficial investments such as renewable generation, energy efficiency, and carbon capture and storage. Rather than crowding out dividends, Green CAPEX was found to considerably influence dividend policy in a positive direction. This reinforces the idea, increasingly popular among sustainable finance scholars, that green investment is a value-improving strategy rather than a substitute for shareholder returns. Companies that channel capital into decarbonization are not simply sacrificing short-term payouts; they appear to be positioning themselves for durable earnings that support both investment and distribution. For investors who have long treated green spending as a cost, the Indonesian evidence offers a counterexample drawn directly from the sector where such spending is most contested.

The study also uncovered two interaction effects that add nuance to the picture. First, the stronger a firm’s ESG performance, the weaker the negative impact of leverage on dividends. Highly indebted companies typically cut payouts to protect their balance sheets, but high ESG performers appear to soften this constraint, possibly because their sustainability credentials give creditors and investors greater confidence in their long-term viability. Second, the stronger a firm’s carbon emission intensity, the weaker the positive impact of profitability on dividends. Profitable but carbon-heavy firms do not translate earnings into payouts as readily as their cleaner peers, suggesting that environmental risk dampens the dividend signal even when the underlying business is performing well. All of the study’s proposed hypotheses were empirically supported, lending coherence to the overall framework.

These findings matter beyond Indonesia’s borders. Emerging markets are where the global energy transition will largely be won or lost, yet most sustainability research draws on data from listed firms in the United States and Europe. By integrating ESG performance, carbon emission intensity, and green capital expenditure into a dynamic dividend policy analysis for an emerging economy, the study helps address a genuine research gap and contributes to the broader literature on dynamic dividend policy. For policymakers, the results hint that sustainability disclosure regimes and green finance incentives may do more than improve corporate behavior; they may also reshape how capital is returned to investors, with cleaner firms becoming more reliable payers. For fund managers screening emerging-market energy stocks, the message is that carbon intensity is not merely an ethical concern but a measurable predictor of payout behavior.

The authors are careful to acknowledge the boundaries of their work. The sample covers a single sector in a single country over a five-year window that includes the disruptions of the pandemic era, and the study relies on aggregate ESG rankings rather than decomposing environmental, social, and governance dimensions separately. Future research, they suggest, could examine sustainability-oriented dividend policies in other industries and countries, probe the impact of individual ESG dimensions, test alternative measures of environmental risk, and explore non-cash dividend payouts in the context of the energy transition. The research was supported by the Indonesia Endowment Fund for Education, and the authors declare no competing interests. Even with these caveats, the study offers a compelling data point in one of finance’s most consequential debates: in Indonesia’s energy sector at least, the companies that pollute less pay more, and the ones investing in a greener future are not asking shareholders to wait.

Subject of Research: The relationship between ESG performance, carbon emission intensity, green capital expenditure, and dividend policy in Indonesia's listed energy firms

Article Title: Do sustainable practices pay dividends? ESG performance, carbon intensity, and green investment in Indonesia’s energy firms

Article References: Do sustainable practices pay dividends? ESG performance, carbon intensity, and green investment in Indonesia’s energy firms. (n.d.). https://doi.org/10.1007/s43621-026-04862-7

Image Credits: AI Generated

DOI: 10.1007/s43621-026-04862-7

Keywords: ESG performance, dividend policy, carbon emission intensity, green capital expenditure, energy sector, Indonesia, system GMM, emerging markets, sustainable finance, corporate sustainability, energy transition, Indonesia Stock Exchange

The methodological rigor behind the review is worth appreciating. The research team searched five academic databases and applied pre-determined eligibility criteria, with two independent reviewers assessing each article before data extraction and analysis. This scoping review approach, following the framework first articulated by Arksey and O’Malley and reported against the PRISMA-ScR checklist, is designed not to statistically pool results but to chart the extent, range, and nature of an entire evidence landscape. The result is a cartographic snapshot of nearly two decades of research, showing where knowledge is dense, where it is thin, and where the field has quietly drifted away from what decision-makers actually need.

One of the most striking findings is temporal: the number of published articles describing climate actions with health co-benefits or risks has increased steadily over time, signaling growing scholarly recognition that climate policy is health policy. Yet the geography of that scholarship is lopsided. Most of the 183 articles originated in the United States, with comparatively less attention paid to Canada and Mexico. Because these three nations differ enormously in energy systems, urban form, agricultural practices, and health-care infrastructure, the review’s authors caution that findings from one jurisdiction cannot simply be transplanted to another. The concentration of evidence in one country leaves substantial blind spots for policymakers elsewhere on the continent.

Even more consequential is what the reviewed studies were actually about. The vast majority described climate actions that were hypothetical, modeled scenarios rather than actions that had been formally proposed or concretely implemented. This is a critical distinction. Modeling a hypothetical coal-plant retirement and estimating the avoided cases of asthma is scientifically valuable, but it cannot tell us whether real-world programs deliver the promised benefits, how implementation barriers erode them, or whether unexpected harms emerge once policy meets reality. The review suggests the field has, in effect, been rehearsing on paper while the actual performance goes largely unmeasured.

The thematic balance also tilts heavily toward mitigation. Articles primarily focused on greenhouse gas emission reduction activities, and the energy sector dominated the literature, encompassing studies of renewable energy deployment, power-plant retirements, building efficiency retrofits, and transportation electrification. Adaptation articles were rare by comparison, and those that did exist primarily examined green infrastructure, such as urban tree planting, stormwater management, and vegetated spaces that cool cities and buffer floods. This asymmetry matters because adaptation actions, which are accelerating worldwide as climate impacts intensify, can carry their own health consequences, both positive and negative, and the evidence base to anticipate them remains sparse.

The health co-benefits documented in the literature are nonetheless substantial and often monetized. Studies of power-sector decarbonization consistently found reductions in fine particulate matter and ozone, translating into avoided premature deaths, fewer cardiovascular events, and reduced respiratory illness. Research on the Regional Greenhouse Gas Initiative and proposed decarbonization policies in the eastern United States quantified benefits specifically to children’s health, a population uniquely vulnerable to air pollution. Transportation studies modeling cleaner vehicles and expanded active mobility found gains from both reduced emissions and increased physical activity. Dietary shifts toward lower-emission food systems showed simultaneous benefits for chronic disease outcomes. Many articles went further and attached dollar values to these health gains, often finding that monetized co-benefits could offset a large share of mitigation costs.

Yet the review also surfaces a persistent gap between evidence and action. While many studies calculated the monetary value of health co-benefits, few provided actionable policy recommendations that decision-makers could directly use. This is a familiar critique of academic research: sophisticated modeling that ends where governance begins. The authors point out that translating findings into policy requires more than numbers; it requires framing health outcomes in terms that sectoral decision-makers, whether in energy, transportation, agriculture, or urban planning, can integrate into their own mandates and constraints. Without that translational step, even the most compelling co-benefit estimates risk remaining confined to journal pages.

The risks side of the ledger deserves equal attention. Climate actions are not automatically benign for health. The broader literature the review situates itself within includes cautionary concepts such as maladaptation, the phenomenon in which adaptation interventions inadvertently increase vulnerability. Energy-efficient building retrofits, for example, can alter indoor air quality in ways that require careful ventilation management. Forest management changes intended to reduce emissions can shift wildfire smoke regimes. Individual adaptation behaviors, such as staying indoors during pollution or heat events, carry their own equity and wellbeing implications. The review’s framing makes clear that identifying and limiting these health risks is as important as maximizing the benefits, and that both demand deliberate attention during policy design.

The authors’ central recommendation follows directly from their findings: engaging and collaborating with health professionals in the design, implementation, and evaluation of climate actions can help decision-makers across health-determining sectors identify and maximize health co-benefits while limiting health risks. This cross-sectoral collaboration echoes guidance from the World Health Organization, which has published frameworks for quantifying and economically valuing health outcomes from both health and non-health climate actions, and quality criteria for integrating health into nationally determined contributions. It also aligns with the growing Lancet Countdown enterprise, which tracks the health dimensions of climate change annually and argues for a health-centred response to a world facing irreversible harms.

For a continent grappling with wildfire smoke, extreme heat, aging grids, and transportation systems that remain stubbornly carbon-intensive, the review arrives at a pivotal moment. Its message is ultimately optimistic but demanding: the health dividend of climate action is real, large, and increasingly well quantified, but it is not automatic. It must be designed in, measured in practice rather than only in models, and evaluated with health expertise at the table from the start. The 183 studies charted here represent a foundation, and the field’s next chapter, the authors imply, should be written less in hypothetical scenarios and more in the messy, instructive reality of policies actually put to work in North American communities.

Subject of Research: Health co-benefits and risks of climate change adaptation and mitigation actions in North America

Article Title: What are climate change adaptation and mitigation actions that have health co-benefits and risks? A scoping review in North America

Article References: Schnitter, R., Berry, P., Gokiert, R., Banuet-Martinez, M., Gerend, S., Terreros-Rodriguez, A., Jackson, E., & Harper, S. L. (2026). What are climate change adaptation and mitigation actions that have health co-benefits and risks? A scoping review in North America. Regional Environmental Change, 26(4), Article 205. https://doi.org/10.1007/s10113-026-02679-8

Image Credits: AI Generated

DOI: 10.1007/s10113-026-02679-8

Keywords: climate change, health co-benefits, scoping review, mitigation, adaptation, North America, green infrastructure, air quality, energy sector, public health, policy, maladaptation