<p>This study investigates the impact of environmental innovation on companies’ carbon (CO2) emission performance, and how this impact is affected by the pressure of other mechanisms. Using worldwide data for companies in the energy sector for the period 2014–2023 and quantile regression, we propose that environmental innovation is associated with greater CO2 emissions performance. Using higher quantiles, the results suggest that a one-standard increase in environmental innovation is associated with a 6%, 3%, and 2% increase in CO2 emissions performance. This impact is stronger for companies with more environmental controversies, as the environmental innovation effect becomes positive and economically substantial across the quintiles. However, we find that the emissions reduction target has an insignificant moderating effect on this association. These findings are consistent across an array of robustness analyses. Using cross-sectional and mechanism analyses, we further show that the impact of environmental innovation and controversies on CO2 emissions performance is more pronounced in companies with lower CO2 emissions and environmental teams and that environmental controversies directly affect environmental innovation and environmental team formation. Thus, this study highlights that policymakers, such as managers and the board of directors, should promote environmental projects and monitor and evaluate their impacts on CO2 emissions performance. They should also be aware of the media’s role in increasing public and government awareness of the environmental issues caused by their companies. Thus, they should adopt effective strategies to reduce CO2 emissions. Regulators should also scrutinize the effectiveness of companies’ environmental policies and activities in combating CO2 emissions.</p>