Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia

Email: arumsetyowati@staff.uns.ac.id

This study investigates the relationship between firms’ corporate environmental responsibility and financial performance by using a sample set of 2,255 firm-year observations representing 472 unique energy firms from 20 countries from 2013–2020. Supporting stakeholder and legitimacy theory, we find that firms with better environment responsibility actions is associated with higher Tobins’q, suggesting that the investors reacts positively with the environmental actions performed by the firms. However, we do not find that environmental actions positively associated with the accounting profit. Our findings suggest that firms at the energy sector should pay attention in a corporate environment responsibility practice in order to obtain good response from the investors and to achieve firm long-term financial goal.