Environmental management plays a pivotal role in the financial performance of the energy industry. A number of studies have focused on the relationship between environmental management and financial sustainability, but the results are inconsistent. In addition, the existing literature failed to study the indirect and nonlinear relationship between the two. To fill this gap, this paper aims to seek out a mediator (debt financing) and employ a threshold effect model to explore the relationship between environmental management and financial sustainability in the energy industry. First, this paper uses least square dummy variable method to examine the relationship among environmental management, debt financing, and financial sustainability, and the results show that environmental management and debt financing have a positive relationship with financial sustainability. Second, the mediating effect model and threshold effect model are employed to examine the relationship among environmental management, debt financing, and financial sustainability, and the results reveal that debt financing can mediate the effect of environmental management on financial sustainability, and there is a nonlinear impact of debt financing on financial sustainability for different thresholds of environmental management. Finally, this paper presents policy proposals to promote the development of the energy industry based on the conclusions.
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