The Impact of ESG Disclosure on Financial Performance: Evidence from US Energy Companies

Abstract

In light of the links between environmental, social and governance (ESG) variables and company financial success, business integration with the internal and external world is gaining momentum (Behl et al., 2021). However, the extent to which the dimensions of social responsibility affect financial performance has varied, despite the intensity of research conducted over two decades. This study aims to examine the impact of ESG disclosures on firms’ financial performance of US energy sector companies’ data using a regression model. Results indicate that the relationship was not significant overall between ESG and return on equity (ROE). ESG had a significant Positive impact on return on assets (ROA). The results of this study benefit stakeholders, customers, energy companies and investors in energy companies in knowing the dimensions of social responsibility that have the greatest impact on the sector.