 Environmental, Social and Governance Performance and Productivity Transformation in Energy Enterprises: Evidence from Panel Data AnalysisMiyan Ashu,
Sarwar Areej,
Laraib Hussain,
Mehmood Meerab and
Akram Muhammad Rehan
Post-Print from HAL Abstract: Environmental, Social, and Governance (ESG) practices have emerged as an important strategic framework for enhancing corporate sustainability, resilience, and long-term competitiveness. However, empirical evidence regarding the impact of ESG performance on firm-level productivity transformation remains limited, particularly in environmentally sensitive sectors such as energy. This study examines the relationship between ESG performance and productivity transformation in energy enterprises using panel data covering the period 2018-2025. A quantitative panel-data research design is employed to evaluate the effect of ESG performance on firm-level productivity transformation. The dependent variable is operationalized through a multidimensional composite productivity transformation index constructed using the entropy weighting method, integrating indicators related to innovation capability, operational quality, sustainability-oriented outcomes, and organizational contribution dimensions. ESG performance is measured using standardized ESG scores, while firm-specific control variables—including firm size, leverage, profitability, and capital intensity—are incorporated to mitigate omitted-variable bias. The empirical analysis adopts fixed-effects panel estimation following Hausman model selection testing. Diagnostic procedures, including multicollinearity assessment, panel unit root testing, heteroskedasticity diagnostics, and autocorrelation testing, are conducted to ensure model reliability. To address potential endogeneity arising from reverse causality and simultaneity, Two-Stage Least Squares (2SLS) estimation is implemented using lagged ESG performance as an instrumental variable. The findings indicate that ESG performance is positively and statistically significantly associated with productivity transformation in energy enterprises. Firms with stronger ESG performance demonstrate superior productivity capability, suggesting that sustainability-oriented strategic practices generate operational benefits beyond conventional compliance outcomes. Dimension-specific analysis further reveals that environmental, social, and governance performance each contribute positively to productivity transformation, although the relative magnitude of these effects varies. The robustness of the results under endogeneity correction strengthens confidence in the stability of the observed relationship. This study contributes to ESG and sustainability literature by extending analysis beyond conventional financial performance outcomes toward broader enterprise productivity transformation. The findings provide practical implications for managers and policymakers seeking to accelerate sustainable competitiveness and organizational upgrading in energy-intensive sectors. Keywords: Sustainability Performance; Corporate Governance; Fixed Effects Model; Panel Data Analysis; Energy Enterprises; Productivity Transformation; and Governance (ESG); Social; Environmental (search for similar items in EconPapers) Published in European Journal of Management, Economics and Business, 2026, 3 (3), pp.195-217. ⟨10.59324/ejmeb.2026.3(3).14⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05704173 DOI: 10.59324/ejmeb.2026.3(3).14 Access Statistics for this paper More papers in Post-Print from HAL |
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