Can crude oil futures market volatility motivate peer firms in competing ESG performance? An exploration of Shanghai International Energy Exchange

Dongyang Zhang, Dingchuan Bai and Xingyu Chen

Energy Economics, 2024, vol. 129, issue C

Abstract: While it is well-established that the financialization and international of Chinese crude oil markets are increasing with the listing of The Shanghai International Energy Exchange (INE), the sustainability performance effects remain poorly understood. Utilizing quarterly data of Chinese listed firms during Q1 2018 to Q1 2023, this paper tests the hypothesis that ESG becomes a preferred business strategy for firms facing challenges induced by fluctuations in crude oil futures prices. Our analysis reveals that, in response to crude oil market volatility, peer firms strategically enhance their ESG performance. This strategic shift is attributed to firms' efforts to counteract cost pressure, alleviate financial constraints, and navigate economic policy uncertainty stemming from crude oil futures market dynamics. Our findings are more evident in firms within heavy-polluting industries, non-energy industries, and those under non-state-owned ownership types. The implications of our research extend to firms across various sectors, highlighting the inherent economic and social benefits of adopting ESG practices to effectively respond to crude oil market volatility.

Keywords: Chinese crude oil futures; Price volatility; ESG performance; Peer firms (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988323007387
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:129:y:2024:i:c:s0140988323007387

DOI: 10.1016/j.eneco.2023.107240

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().