ESG strategies and corporate financial performance: a comparison of the US energy and renewable energy industries
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 9 December 2024
Abstract
Purpose
This study aims to investigate the relationship between environmental, social and governance (ESG) strategies and corporate financial performance in energy and renewable energy industries in the USA between 2013 and 2023.
Design/methodology/approach
The system generalised method of moments technique analyses the annual panel data at the given period. LSEG Asset 4 Database (formerly Thompson and Reuters) scores were used to measure ESG and corporate financial performance scores via accounting and market-based performance.
Findings
The results show that energy and renewable energy companies cannot be categorised as individual industries and that there is no difference between the two. Energy industry findings reveal that ESG strategies were positively associated with accounting performance and negatively related to market performance. Both environmental and governance pillars had insignificant and social pillar had positive effects on accounting performance, whereas only the environmental pillar negatively affected market performance.
Originality/value
The findings have unique implications for companies investing in ESG strategies in the US energy industry. They also suggest a direction for formulating compulsory regulations in the US energy industry, which can be valuable for policymakers, governments and financial regulators in shaping the industry’s future and potentially influencing its trajectory.
Keywords
Citation
Hyusein, A. and Cek, K. (2024), "ESG strategies and corporate financial performance: a comparison of the US energy and renewable energy industries", International Journal of Energy Sector Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJESM-07-2024-0023
Publisher
:Emerald Publishing Limited
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