AbstractRecent empirical studies often support the positive relationship between corporate environmental performance (CEP) in terms of carbon dioxide (CO2) and greenhouse gas (GHG) emissions and corporate financial performance (CFP). However, this depends on the measurements of CEP (the absolute and relative CEP) and CFP (accounting‐based and market‐based CFP). To understand the relationship structurally, based on the literature, this study proposes identity models that integrate CO2 and GHG emissions and financial factors. The models decompose CO2 (GHG) emissions into carbon intensity (GHG intensity), energy intensity, the cost‐to‐sales ratio, the total‐assets‐turnover ratio (TATR), leverage, and equity. The model of supply‐chain GHG emissions additionally adopts supply‐chain GHG intensity. As a decomposition method, this study uses the log‐mean Divisia index. As an application example of the CO2 model, this study targets Japanese manufacturing firms in 16 sectors from fiscal years (FY) 2011 to 2015. Results show that the change in CO2 emissions as of 2015 (−802.1 kilotonnes [kt]) is decomposed into 2922.5 kt for carbon intensity, −26036.3 kt for energy intensity, −6350.5 kt for the cost‐to‐sales ratio, −8495.6 kt for the TATR, −7912.3 kt for leverage, and 45070.1 kt for equity. Average values of relative contribution ratios are 20.6% for carbon intensity, 19.1% for energy intensity, and the remaining approximately 60% for financial factors. Among the 16 sectors, as of 2015, the change in total CO2 emission is statistically significantly positive for equity and significantly negative for the TATR and leverage.