Impact of ESG Disclosure on Price Discovery Process in the Indian Energy Sector

Prashant Sharma (), Modish Kumar (), Sanjeev Kumar (), Hanna Olasiuk (), Debi Prasad Satapathy () and Tetiana Ganushchak ()
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Prashant Sharma: Jindal School of Banking and Finance, O. P. Jindal Global University Sonipat, Haryana, India
Modish Kumar: Himachal Pradesh University Business School, Himachal Pradesh, India
Sanjeev Kumar: Jindal Global Business School, O.P. Jindal Global University, Sonipat, Haryana, India
Hanna Olasiuk: Jindal Global Business School, O.P. Jindal Global University, Sonipat, Haryana, India
Debi Prasad Satapathy: XIM University, Bhubaneswar, India
Tetiana Ganushchak: State University of Trade and Economics, Kyiv, Ukraine

International Journal of Energy Economics and Policy, 2025, vol. 15, issue 3, 383-389

Abstract: ESG (environmental, social, and governance) framework has importance in investing environment due to its direct relevance with sustainable investments and long-term stock performance. ESG carries implications for all sectors of the economy and energy sector is no exception to that. In case of energy sector, it supports the investments in sustainable energy, carbon reduction, and ethical governance. The present study tries to assess the relative importance of ESG disclosure scores on the price discovery process of energy firms in Indian stock market. The study also examines the pricing efficiency of future contracts in leading the spot prices of energy sector stocks of Indian economy. Using the data from 12 energy firms in Indian stock market, this study deploys the standard time series methodology including test of stationarity, co-integration and error correction mechanism to assess the causality between future and spot prices of energy firms. The findings indicates that ESG disclosure scores do not have an impact on price discovery for most of the energy sector companies, with no long-term causality. BHEL, a low ESG level manufacturing and engineering company in the energy sector, shows slightly different results, indicating reverse causality. Similarly, insignificant short-term causal relationships are exhibited by most of the firms, except NTPC and TTPW (Tata Power) show significant short term causality.

Keywords: Environmental; Social; and Governance Factors; Causality; Price Discovery; Sustainability; Lead-lag Relationship; Energy Sector (search for similar items in EconPapers)
Date: 2025
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DOI: 10.32479/ijeep.18807

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