Abstract
This paper aims to investigate whether the environmental, social and corporate governance (ESG) score of companies operating in the energy sector is associated with their corporate financial performance (CFP). The research covered data from eight companies with a dominant position in the Polish energy sector. The research used the comparative analysis between ESG performance and accounting-based measures of profitability: return on equity (ROE), return on assets (ROA) and return on sales (ROS). Additionally, reference was also made to the DuPont model. The acquired results do not reveal repetitive dependencies that would facilitate the discovery of a pattern of the impact of the factors of ESG on the financial performance of enterprises. Despite indicating the cases of correlations between the ESG scores and CFP at a high level, indeed sometimes at a very high level, the particular case studies significantly differ from each other. This may be caused by the fact that Polish enterprises from the energy sector illustrate far-reaching specifics, among others, with regard to the key significance of the entities with a prevalent state ownership and strict administrative regulations, which are subject to the energy market, state of development and structure of the whole sector in Poland. Thus, this is also why the mechanisms or dependencies, whose existence it is possible to expect in conditions of free competition, may be weakened or even eliminated in Polish conditions.
Highlights
We contribute to that ongoing discourse of whether ESG performance of companies matters for companies’ corporate financial performance (CFP) by raising the following research question: do companies with higher ESG scores operating in the Polish energy sector show better financial results? We aim to focus on a narrow but very specific segment of the Polish economy—
The difficulties that occur in the sphere of the modernization of power engineering have been described, while simultaneously a critical assessment of the role played by the state in this process has been provided
The energy sector is a very specific one in which, due to the intricacy of the process, the regulatory ownership role of the state may remain justified, the more so as the intricacy and frailty of the energy market overlaps with global trends of a decline in the identification of employees with corporations in which they are employed
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. The energy sector, or rather its transformation, will drive the world economy and create new industries and services, and a new division of labour [1]. Energy security is one of the elements of the energy policies of every country and constitutes a strategic issue, while the energy sector alongside others (e.g., the financial, transportation and food sectors) shapes the efficient functioning of the whole national economy [2]. Contemporary researchers, when diagnosing energy sector companies with regard to their reports, most often consider the following issues [3]:
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