The financial world is no exception to the impact of the wave of increased sustainability trends taking over the world at large. However, it is not always feasible for companies to become more sustainable due to financial and structural limitations within companies, industries, and countries. Therefore, by analyzing 282 global companies representing 28 industries from 26 countries between 2015 and 2020, this thesis suggests an alternative perspective where improving environmental performance can help firms reduce their funding costs. Furthermore, by studying the relationship between firms’ financial characteristics and environmental performance, firms with lower GHG emissions can have higher leverage ratios and finance more of their assets through debt. The analysis proves that after controlling for the book-to-market ratio, size of firms, excess returns on the market, momentum of stocks, time, type of industry, and country of location for the company, better environmental performance results in higher excess returns, thus reducing the cost of equity. Additionally, the study indicates that firms with lower GHG emissions have higher leverage ratios after controlling for total assets, total debt, time, and industry-fixed effects.