ESG and carbon emissions in energy giants: does a green stance reflect in market value?

Abstract

This study investigates the effects of Environmental, Social, and Governance (ESG) scores and carbon emissions (CO2) on the market value of energy firms, drawing on stakeholder and legitimacy theories. Using a dataset from Refinitiv covering 2012-2022, the analysis applies Konya's panel causality test, which accounts for cross-sectional dependence and slope homogeneity. Findings reveal no causal relationship between ESG scores, carbon emissions, and market value. The research fills a gap in the literature, offering theoretical insights and practical guidance for investors and policymakers on sustainability and carbon management. Future studies could explore sectoral variations and long-term ESG impacts.