Firm-level evaluation of the environmental Kuznets curve: thresholds in cross-sectional data from small, medium and mid-sized enterprises

In a context of insufficient global regulation, a substantial proportion of firms set voluntary greenhouse gas emissions reduction targets. This study draws on a new dataset of about 1000 GHG Protocol-compliant assessments from a thousand Europe and US-based small and medium enterprises and mid-sized firms between 2019 and 2024 to investigate how emissions metrics compare across as companies grow and consolidate their productivity. Moving beyond the conflicting environmental Kuznets curve evidence and the traditional focus on large enterprises, we uncover a new, untheorized link between emissions and firm productivity. Using competing polynomial and threshold regression models, and addressing endogeneity, selection bias and omitted variable bias by relying on Granger causality, Hausman instruments, poststratification, Oster sensitivity tests and split sample testing, we establish that contrary to the classic inverted U shape of the EKC, corporate emissions and emissions intensities do not show a clear turning point but instead stabilize once over a critical threshold in revenue per employee. We find raising productivity can halve per revenue intensities despite simultaneous fourfold and twofold surges in absolute and per-employee emissions. This structural influence of financial productivity challenges the fairness of corporate net-zero targets that assume comparable baseline intensities across firms.