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This study presents new empirical evidence to the relatively scarce number of research papers on the correlation between eco-innovation and company growth. It sheds light on the causal relationship between these two variables.

Data from the Spanish Technological Innovation Panel from 2008 to 2016. Propensity Score Matching is applied to avoid self-selection problems.

The study found that engaging eco-innovation has no statistically significant impact on employment and sales growth. Therefore, the main benefits of transitioning to green innovations are in the environmental aspect.

The research findings provide a clear direction for policymakers. Such directions suggest the design of instruments that make the adoption of eco-innovations mandatory with the firm promise of substantial environmental benefits.

The paper explores an important issue for environmental policy. If being an eco-innovator is positively or at least neutrally related to growth, policymakers could create measures that encourage this type of green innovation. This would benefit the environment, and if the impact is positive, it would also have a positive social effect.