REVISITING THE IMPACT OF ESG PRACTICES ON FIRM FINANCIAL PERFORMANCE IN THE ENERGY SECTOR: NEW EMPIRICAL EVIDENCE

Abstract

This paper examines the role played by the ESG credentials in enhancing the financial performance of companies operating in the energy sector, as well as the deterring factors of firm profitability under the impact of negative environmental spillovers. The analyzed sample comprises over 500 publicly reported companies from various energy fields and the research methodology embeds robust regression models and network analysis through Gaussian/Markov Mixed graphical models as two advanced econometric techniques essential to processing cross-sectional data. Main results bring new insights into the modelers of company performance through ESG practices and entail that the environmental pillar of ESG has negative effects on firm financial performance, while CSR actions positively affect energy companies' efficiency and support the benefits that sustainability measures can have on the financial results of companies in the energy sector.