Using the data of Chinese listed companies during 2012-2016, this study examines the effect of environmental investment on financial performance, as measured by return on assets (ROA). We also examine the moderating effect of industry attributes, company ownership, and region on this relationship. The empirical results show that there exists a U-shaped relationship between environmental investment and financial performance. However, only 11% of Chinese listed companies can attain profitable environmental investment. In addition, the impact of environmental investment on financial performance in state-owned enterprises (SOEs) is higher than that in private-owned enterprises (POEs), and a company’s environmental investment in China’s eastern regions can do more to promote financial performance. The findings of this study can help managers to reasonably manage the tensions between environmental investment in relation to stakeholders and the pursuit of profitability.