Short-term pain, long-term gain? The temporal impacts of environmental innovation on agricultural emissions

Purpose This study explores short-term operational disruptions and long-term benefits of environmental innovation, emphasizing the moderating role of environmental management system (EMS) in facilitating smoother transitions to reduced emissions. The study aims to provide insights for agricultural firms and policymakers to improve implementation strategies and achieve sustainability goals. Design/methodology/approach This study uses Refinitiv database, a leading repository of corporate environmental, social and governance metrics tailored for financial stakeholders and institutions. We extract an unbalanced panel of 100 agricultural firms from 2008 to 2022, resulting in a total of 383 firm-year observations. Using the system generalized method of moments, the study analyzes panel data to address endogeneity and capture the time-dependent effects of environmental innovation on emissions. Findings The study finds that environmental innovations initially lead to short-term increases in emissions due to operational disruptions. However, in the long term, these innovations contribute to significant reductions in emissions. Further, EMS helps firms mitigate initial setbacks and accelerates the transition to improved environmental performance. Practical implications Agricultural firms should adopt EMS frameworks to better manage the transition to environmental innovations and mitigate initial disruptions. Policymakers can support firms through incentives and regulatory frameworks that facilitate long-term adoption. Effective EMS implementation can enhance resource optimization, reduce operational challenges and contribute to achieving sustainability goals within the agricultural sector. Originality/value This paper examines the temporal impacts of environmental innovation on agricultural emissions, addressing gaps in research that focus on non-agricultural sectors and cross-sectional data. It offers the first empirical analysis of the temporal effects of environmental innovation in agriculture. It provides valuable insights for firms and policymakers by highlighting the role of EMS in facilitating smoother transitions. The findings contribute to both academic literature and industry practices by offering evidence-based recommendations for sustainable environmental performance improvements.