Carbon Intensity, Financial Sustainability, and Financial Performance: The Moderating Role of Financial Slack

The transition toward a lower-carbon economy increases the financial relevance of corporate emissions, yet prior evidence on the financial consequences of carbon activity remains mixed. This study examines the association of Carbon Intensity with Financial Sustainability and Financial Performance and tests whether Financial Slack moderates these relationships among non-financial firms listed in ASEAN-5 and China. Using purposive sampling and LSEG Workspace (Refinitiv) data for 2020–2025, the final sample comprises 136 firms and 803 firm-year observations. Financial Sustainability is proxied by the Altman Z-Score, Financial Performance by Return on Assets and Return on Equity, and Financial Slack by the ratio of current assets to current liabilities. Panel regressions in Stata 18 employ model-specific estimators, year fixed effects, firm-clustered standard errors, and pre-specified directional one-tailed tests; two-tailed p-values are also reported for transparency. Carbon Intensity is negatively associated with all three financial outcomes, with weaker evidence for ROA, whereas Financial Slack does not provide evidence of a buffering role. Relative to the closest prior study, this study adds Financial Sustainability to ROA and ROE, uses a combined Scope 1–Scope 2 intensity measure standardized by revenue, and tests the framework in a multi-country ASEAN-5 and China setting.