The impact of ESG performance over financial performance: A study on global energy and power generation companies

Abstract

This study aims to analyze the impact of ESG performance over the financial performance of global energy and power generation companies which are considered as one of the most sensitive industries. The study explores the effect of ESG performance over the financial performance of the corporations operating business in sensitive industries such as energy and power generation firms regarding the profitability and market value of the companies using panel data regression. ESG performance data and financial data of 192 energy and power generation firms from 2008 to 2019 were taken from Thomson Reuters Eikon database for the statistical analyses. The findings suggest that ESG performance has both positive and significant impacts over the profitability of the firms but negative impact over the market value of the firms. Besides, ESG performance is correlated in a significant way with the financial performance of energy and power generation corporations. This study adds value and importance to the sustainable business practice and sustainability reporting for the energy and power generation companies worldwide. Moreover, the findings of the study would assist the relevant investors, business analysts, industry regulators, policymakers, and decision-makers all other stakeholders who are interested in ESG and sustainability to take noteworthy decisions.