Determinants of ESG Score in the Energy Sector

Costache-Dragodan Cristiana Adriana (), Lepădatu Roxana Elena (), Istudor Mihai () and Toderasc Ștefan Alin ()
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Costache-Dragodan Cristiana Adriana: Bucharest University of Economic Studies, Romania
Lepădatu Roxana Elena: Bucharest University of Economic Studies, Romania
Istudor Mihai: Bucharest University of Economic Studies, Romania
Toderasc Ștefan Alin: Bucharest University of Economic Studies, Romania

Proceedings of the International Conference on Business Excellence, 2025, vol. 19, issue 1, 5098-5117

Abstract: This research aims to analyze the relationship between financial performance, capital structure, profitability and Environmental, Social, and Governance score within companies in the energy sector. The main objective of the study is to highlight the extent to which financial factors, such as financial performance and capital structure influence the ESG score in selected companies in the energy sector during the period 2019-2023. In order to achieve the research objective, three research hypotheses were set in order to establish the degree of their validation: H1: Profitability positively influences the ESG score of companies; H2: Capital structure influences the ESG score of companies; H3: Future growth of companies influences the ESG score. Using an econometric model based on financial data and ESG scores obtained from companies listed on the London Stock Exchange, the study identifies the relationships between these variables and highlights the effects of ESG implementation on the financial stability of companies. The results obtained suggest that, in general, a financial performance positively influences ESG investments, while a solid capital structure influences the ESG score, but in a weaker and less consistent manner. On the other hand, company growth, measured by revenue growth, seems to negatively influence the ESG score. The study aims to analyze the theoretical as well as practical implications of integrating ESG criteria into the financial strategies of companies in the energy sector and suggests directions for future research.

Keywords: Sustainable; Development; Performance; ESG; Return on assets; Net Margin; Debt/Equity; Independent variables; Dependent variable; Regression; Energy Companies. (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:poicbe:v:19:y:2025:i:1:p:5098-5117:n:1048

DOI: 10.2478/picbe-2025-0391

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