Does internal carbon pricing improve firm performance? Evidence from indian listed companies

• We examined the impact of internal carbon pricing (ICP) disclosure on the financial performance of Listed firms in India. • Results indicate positive and significant impact of ICP disclosure on firm performance. • The findings support the growing role of climate change mitigation and sustainability along with policy discussions. This study evaluates the effect of internal carbon pricing (ICP) disclosure on the financial performance of publicly listed firms in India, an emerging economy. Firm performance is measured through return on assets (ROA), return on equity (ROE), return on capital employed (ROCE), and earnings per share (EPS). Employing Panel-Corrected Standard Errors (PCSE) and two-stage least squares (2SLS), the analysis reveals consistent positive associations for ROA, ROE, and EPS, with ROCE positive but insignificant. Findings underscore ICP disclosure as a strategic sustainability mechanism that strengthens corporate accountability, enhances firm value, and informs policy debates on climate-related financial disclosure in emerging markets.