Abstract:
This study explores the impact of carbon footprint reduction on corporate profitability in Pakistan’s energy sector. It highlights the sector's significant contribution to greenhouse gas emissions due to reliance on fossil fuels and outdated technologies, emphasizing the critical need for transitioning to sustainable practices. The research is grounded in theoretical frameworks like Porter’s Hypothesis, the Resource-Based View (RBV), and Stakeholder Theory, which suggest that integrating sustainability can enhance competitive advantage, operational efficiency, and long-term profitability. The study reviews global and regional initiatives, including the Paris Agreement and Sustainable Development Goals, to frame the policy context. Key strategies for carbon reduction, such as renewable energy adoption, energy efficiency improvements, and carbon capture technologies, are examined, highlighting their potential to lower operational costs and improve corporate image. Empirical evidence from developed and emerging economies, including India and Brazil, underscores the financial benefits of sustainability, such as increased revenues and enhanced brand reputation. Despite these advantages, the research identifies significant barriers in Pakistan, including high capital costs, limited green financing, technological constraints, and weak regulatory frameworks. These challenges hinder the widespread adoption of sustainable practices in the energy sector. However, the study posits that carbon reduction measures can align with Pakistan's climate targets and economic growth objectives if supported by targeted policies, financial incentives, and international collaboration. The findings aim to provide actionable insights for policymakers and industry stakeholders, demonstrating that sustainability is not only environmentally imperative but also economically advantageous, fostering a path toward a low-carbon, profitable energy sector in Pakistan. Future research directions include examining industry specific profitability metrics and comparative studies with similar economies to further substantiate the link between carbon reduction and financial performance.
