How Responsible Are Energy and Utilities Companies in Terms of Sustainability and Economic Development?

Adelina Fometescu, Camelia-Daniela Hategan () and Ruxandra-Ioana Pitorac
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Adelina Fometescu: Doctoral School of Economics and Business Administration, West University of Timisoara, 300115 Timisoara, Romania
Camelia-Daniela Hategan: Department of Accounting and Audit, ECREB—East European Center for Research in Economics and Business, Faculty of Economics and Business Administration, West University of Timisoara, 300115 Timisoara, Romania
Ruxandra-Ioana Pitorac: Department of Marketing, International Affairs and Economics, Faculty of Economics and Business Administration, West University of Timisoara, 300115 Timisoara, Romania

Energies, 2024, vol. 17, issue 23, 1-20

Abstract: The increasing importance of ESG (environmental, social, governance) scores in investment decisions has led to a growing interest in understanding their impact on corporate performance, particularly in the energy and utilities sector. This study’s focus is to identify the research gap regarding the connection between corporate adherence to Sustainable Development Goals (SDGs) and the financial outcomes of these companies. The research objective is to examine the correlation between ESG scores and key financial metrics, such as return on assets (ROAs) and return on equity (ROE), using a quantitative approach to analyze a dataset of publicly traded companies in this sector. Using a panel data regression analysis, we identified a significant correlation suggesting that higher ESG scores are associated with improved financial performance for the entire sample and separately for the two sectors. These findings indicate that companies with robust ESG practices enhance their sustainability profile and achieve better operational efficiency and profitability. This research contributes to the existing literature by providing empirical evidence of the positive impact of ESG factors on corporate performance in a sector characterized by high environmental impact and regulatory scrutiny. Ultimately, this study underscores the necessity for energy and utilities companies to integrate ESG considerations into their strategic frameworks, thereby aligning financial objectives with sustainable practices to drive long-term success.

Keywords: responsibility; sustainability; economic development; energy; ESG; financial performance; risk; corporation (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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