What drives companies to invest in sustainability?
Fahad Khalid defends his thesis, which is titled as 'The Dynamics of Corporate Green Investment in Emerging Markets: Institutional and Stakeholder Perspectives, on 21 May 2026 at the Open Universiteit in Heerlen.
Increasing pressure on companies
Khalid was motivated to choose this topic for his PhD research is the growing urgency of climate change and the associated pressures on companies to establish sustainable operations. In the last decade, government agencies, capital markets and society at large have been strongly demanding that corporations should not only make economic returns but also mitigate their impact on the environment.
Although many companies are investing in environmentally sustainable technologies and practices, awareness of the underlying motivations remains limited. This is particularly the case in emerging economies such as China, where environmental problems are pressing and institutional characteristics are distinct. Khalid aims in his thesis to fill the gap by investigating the factors that influence corporate green investment decisions, including financial infrastructure, institutional imperatives, and engagement with stakeholders.
Factors that impact green behaviour
Khalid’s research shows that the Green Financial System in China plays an effective impact in encouraging organizations, particularly those with high levels of pollution, to multiply their green investment. Furthermore, social pressures, particularly those exerted by environmental non-governmental organizations, and the expectations of the most important stakeholders, such as customers, employees, suppliers, and shareholders, are identified as powerful factors influencing corporate sustainability strategies.
Importantly, the research study demonstrates that such investments are more than merely symbolic; they have actual consequences by reducing corporate environmental violations. Finally, organizations with more competent CEOs and greater gender diversity in their boardrooms are more adept at translating sustainability demand into practical environmental improvements. Such insights can help governments and corporate leaders hasten the transition to a more sustainable economy.
The impact of the Chinese Green Financial System
One of the most interesting findings of Khalid’s research is his conclusion that the Green Financial System adopted in China, in the form of a national policy, has a significant positive impact in increasing the level of green investment in firms. Using a quasi-natural experiment design, the findings determine that the companies demonstrate a strong reaction to monetary motivation and control signals by redirecting the resources to environmentally benevolent activities, such as pollution management, renewable energy use, and sustainable production process.
This empirical data is important as it confirms that carefully designed financial policies can be used to effectively direct the environmental practices of corporations to avoid the necessity of relying solely on voluntary practices. As an illustration, companies subjected to heightened regulatory and financial stress significantly expanded their green investment in comparison to their counterparts thus attaining quantifiable improvements in environmental performance.
These findings were published in 2025 in the China Finance Review International and received significant academic interest. The growing popularity of this work lends credence to the relevance of the work to both scholarly research and practical policymaking.
About Fahad Khalid
Fahad Khalid (Lahore, 1986) is an Assistant Research Fellow at the School of Business, Guilin University of Electronic Technology in China. He specializes in sustainability, corporate governance, and finance, and has published extensively in leading international journals. On May 21, 2026, he will defend his dissertation titled 'The Dynamics of Corporate Green Investment in Emerging Markets: Institutional and Stakeholder Perspectives' at the Faculty of Management of the Open Universiteit in Heerlen.
Promotor is Prof. Dr. Petru L. Curseu, and copromotor is Dr. Cosmina Lelia Voinea. The defense can be attended live at the Open Universiteit in Heerlen and followed online via ou.nl/live.
