Does ESG Performance Affect Firms’ Performance? Evidence from European Energy Companies.

This study investigates the effect of ESG performance on economic and mar-ket performance of European energy companies. Findings show that: a) com-pared to the traditional energy companies, renewable energy companies expe-rience a lower economic and market performance, but they enjoy greater ben-efits from their commitment to ESG issues, b) during crisis periods the costs associated with energy companies’ ESG engagement outweigh the anticipated benefits, and c) the national capitalism model significantly moderates the re-lationship between energy companies’ ESG performance and their economic and market performance. Overall, our findings provide significant insight and implications for managers and policymakers. Being sustainable pays off and helps to meet stakeholders’ expectations, thus increasing social trust. Howev-er, European policymakers should enact legislative provisions to push energy companies towards greater commitment to ESG issues and, at the same time, they should consider a stable solution to financially support the use of renew-able energy sources. Future research could further investigate the effects pro-duced by the current economic and energy crisis which is affecting Europe, and whether the measures adopted by the EU policy-makers will have pro-duced real benefits for energy companies engaged in ESG issues.