Ho obe , Alexand a; Bulai, Vlad; Rădulescu, Magdalena; Belascu, Lucian;
Dumi escu, Dan Gab iel
A icle
ESG ac ions, co po a e discou se, and ma ke assessmen
nexus: E idence om he oil and gas sec o
Jou nal o Business Economics and Managemen (JBEM)
P o ided in Coope a ion wi h:
Vilnius Gediminas Technical Uni e si y (VILNIUS TECH)
Sugges ed Ci a ion: Ho obe , Alexand a; Bulai, Vlad; Rădulescu, Magdalena; Belascu, Lucian;
Dumi escu, Dan Gab iel (2024) : ESG ac ions, co po a e discou se, and ma ke assessmen nexus:
E idence om he oil and gas sec o , Jou nal o Business Economics and Managemen (JBEM), ISSN
2029-4433, Vilnius Gediminas Technical Uni e si y, Vilnius, Vol. 25, Iss. 1, pp. 153-174,
h ps://doi.o g/10.3846/jbem.2024.21070
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Pages 153–174
h ps://doi.o g/10.3846/jbem.2024.21070
ESG ACTIONS, CORPORATE DISCOURSE, AND MARKET ASSESSMENT
NEXUS: EVIDENCE FROM THE OIL AND GAS SECTOR
Alexand a HOROBET 1, Vlad BULAI 1, Magdalena RADULESCU 2,3, Lucian BELASCU 4,
Dan Gab iel DUMITRESCU 1
1Depa men o In e na ional Business and Economics, Bucha es Uni e si y o Economic S udies, Bucha es , Romania
2Depa men o Finance, Accoun ing and Economics, Uni e si y o Pi es i, Pi es i, Romania
3 Ins i u e o Doc o al and Pos -Doc o al S udies, Uni e si y Lucian Blaga o Sibiu, Sibiu, Romania
4Depa men o Managemen , Ma ke ing and Business Adminis a ion, “Lucian Blaga” Uni e si y o Sibiu, Sibiu, Romania
A icle His o y: Abs ac . This pape ocuses on he oil and gas sec o because o i s di ec ex-
posu e o he comple e ange o ESG challenges, as well as s ong p essu e o
change business models due o he ene gy ansi ion. We in es iga e he ESG
sco es o a sample o global companies in his sec o and hei ela ionship o
s ock ma ke pe o mance and o he ESG in ensi y o co po a e epo s. As an
o iginal con ibu ion, we inco po a e he in ensi y o co po a e discou se on
echnology- ela ed sus ainabili y opics o he i s ime in he li e a u e. Ou
indings e eal ha in es o s examine bo h sus ainabili y discou se and esul s
when de e mining a company’s alue and alida e he ole o ESG sco es and
ankings in p o iding in es o s wi h an accu a e and meaning ul assessmen
o companies’ sus ainabili y ac ions. Mo eo e , companies’ disclosu e o hei
sus ainable ac ions and echnological de elopmen s ela ed o sus ainabili y is
posi i ely ela ed o s ock e u ns. This implies ha a ocus on sus ainable p ac-
ices and cons an communica ion wi h in es o s migh esul in highe ma ke
pe o mance. Fu he mo e, encou aging companies, pa icula ly hose in sec o s
and indus ies sensi i e o ESG ac o s, o in es in ESG ini ia i es, is accompa-
nied by imp o ed pe o mance, which makes hem mo e a ac i e and be e
posi ioned o a ac inancing.
■ ecei ed 21 Ap il 2023
■ accep ed 12 Janua y 2024
Keywo ds: ESG sco es, co po a e discou se, sus ainabili y, echnology, co po a e pe o mance, s ock e u ns, panel
modelling.
JEL Classi ica ion: M21, L21, O14, Q56.
Co esponding au ho . E-mail: [email p o ec ed]
JOURNAL o BUSINESS
ECONOMICS & MANAGEMENT
1. In oduc ion
The 2015 Pa is Ag eemen adop ed a COP21 was expec ed o be a game-change o clima e
change mi iga ion, bu coun ies’ pledges o educe g eenhouse gas emissions we e no well
kep . The 2022 COP27 Con e ence in Egyp in ol ed co po a ions in he deba e and s essed
ha co po a e accoun s and inancial epo ing mus “speak he u h” abou companies’
ca bon in ensi y and accu a ely e lec he clima e challenge (Clima e Ac ion 100+, 2022).
In his con ex , public expec a ions abou en i onmen , social and go e nance (ESG) is-
sues and esponsibili ies ha e isen. The e o e, businesses ha e aced new challenges and
154 A. Ho obe e al. ESG ac ions, co po a e discou se, and ma ke assessmen nexus: e idence om he oil and gas sec o
p essu es ela ed o ESG disclosu es (Kamal & Deegan, 2013), which became c i ical o hei
long- e m impac on in es o s and s akeholde s (Ta muji e al., 2016; Busch e al., 2016). Oil
and gas (O&G) i ms isk missing ou on in es men und oppo uni ies, which could a ec
hei inance, in es men , and de elopmen s a egies, unless hey build sus ainabili y in hei
s a egies.
Companies in he O&G sec o ha e been hea ily c i icized o a lack o indus y-wide e-
po ing s anda ds, eliance on unp o en echnologies and ca bon o se s, and weak o absen
in e im a ge s (Ca bon T acke , 2021). This shows ha companies s uggle o ind c edibili y,
since achie ing he ne -ze o emissions (NZE) would equi e a undamen al ans o ma ion o
decades-old business models.
The ela ionship be ween ESG c i e ia and co po a e pe o mance has been deba ed since
he 1970s (F iede e al., 2015), wi h many inconclusi e o e en con adic o y indings (Re -
elli & Vi iani, 2015). The pu pose o his pape is o con ibu e o his line o esea ch by
examining sus ainable business ac ions mo e b oadly, ocusing no only on ESG sco es and
hei ela ionship o s ock ma ke pe o mance, bu also on he link be ween co po a e com-
munica ions o in es o s as e lec ed by Qua e ly Ea nings Calls (QECs) and ESG sco es, on
he one hand, and be ween he ESG in ensi y o QECs and s ock e u ns, on he o he hand.
The a ionale behind adding he communica ion dimension is i s po en ial ole in shaping
he ma ke ’s expec a ions ega ding he u u e o a company. Assessing he link be ween
he wo has impo an p ac ical implica ions in he con ex o a ising ocus on ESG opics
h oughou he in es men communi y (Moody’s, 2021). I discou se in ensi y p o es bene i-
cial, hen cons an communica ion wi h in es o s would cons i u e an ad an age. Mo eo e ,
he ela ionship be ween co po a e discou se and ESG sco es may be used by ma ke analys s
and o he s akeholde s o check whe he discou se is e lec i e o ac ion.
Since he e is li le li e a u e on indi idual sec o s and indus ies in connec ion o ESG
issues, we di ec ou analysis o he O&G sec o due o he exposu e o i s companies o
he ull spec um o ESG issues. Thei impac on he en i onmen is ypically he ocus o
a ious s akeholde s, bu he socioeconomic ou comes o local communi ies can be equally
con o e sial. Mo eo e , he ene gy ansi ion p essu es O&G companies o shi hei busi-
ness models owa d clean ene gy while main aining p o i abili y. Such a shi would equi e
he de elopmen o new skills and knowhow in highly compe i i e sec o s such as enewable
ene gy and elec ic mobili y. Fo his eason, we add echnology o he h ee ESG opics.
Ou esea ch con ibu es signi ican ly o he inc easing li e a u e on sus ainabili y disclo-
su e, ESG pe o mance, and co po a e alue in h ee ways. Fi s , i d ills down o he sec o
le el, concen a ing p ima ily on oil and gas businesses, which ace conside able sus ainabili y
isks and di icul ies in mee ing he NZE a ge . The e is a no able esea ch gap in his domain,
wi h e y ew schola ly e o s ocusing on he ene gy sec o , despi e i s eno mous en i-
onmen al e ec and c i ical ole in he sus ainabili y ansi ion. Ou esea ch p o ides dis-
inc i ely ele an insigh s by ocusing on he mos exposed ye unde - esea ched indus y.
Fu he mo e, because we assess all h ee ESG componen s, ou me hodology is applicable
o a wide ange o indus ies, wi h a ying ma e iali y conside a ions o each dimension.
Second, he me hodology includes quan i a i e ESG a ings as well as quali a i e discou se
analysis o ea nings calls in o an in eg a ed amewo k ha e lec s he duali y o sus ain-
abili y communica ions – discou se and ac ion. This no el app oach in es iga es whe he
execu i es’ ESG commi men s ansla e in o measu able pe o mance ad an ages isible o
in es o s. In his ega d, we employ QECs o in es iga e en e p ises’ sus ainabili y he o ic.
Because hey a e issued mo e equen ly han annual o sus ainabili y epo s, hey a e mo e
Jou nal o Business Economics and Managemen , 2024, 25(1), 153–174 155
ocused on ecen pe o mance and may include mo e in o ma ion ega ding he company’s
ini ia i es. As a esul , he pape ’s con ibu ion esides in b idging quali a i e and quan i a i e
me hods in o de o p o ide a ho ough and comp ehensi e unde s anding o how sus ain-
abili y communica ions impac ma ke alue.
Thi d, and pe haps mos impo an ly om he s andpoin o p ac i ione s, he analysis
pionee s he inclusion o echnological imp o emen s o sus ainabili y alongside ESG opics.
This unde sco es he c i ical impo ance o echnical inno a ion in allowing oil and gas i ms
o align wi h deca boniza ion pa hways. By analysing he o ical emphasis and demons a ed
capabili ies a ound low-ca bon echnologies, his app oach guides in es o s o an icipa e
s anded asse isks and compe i i e posi ioning. To he bes o he au ho s’ knowledge, no
p e ious academic wo k has p oposed his echnological pe spec i e in o assessmen s o
sus ainabili y communica ions; hus, his s udy is he i s a emp o es ablish a link be ween
co po a e communica ion ega ding sus ainable ini ia i es and echnology- ela ed subjec s
ele an o sus ainabili y, ollowed by an examina ion o hei impac on companies’ ESG
a ings and ma ke alua ion.
We u he con ibu e o exis ing schola ly wo k in h ee ways in e ms o me hodological
design. Fi s , we examine he associa ion be ween co po a e p ac ices and s ock pe o mance
using he h ee p ima y cons i uen s o ESG ac o s (en i onmen , social and go e nance), in
addi ion o he o al ESG sco e, adding o he ela i ely ew schola ly s udies ha ha e aken
his app oach. Second, ou s udy co e s a longe ime pe iod (11 yea s), whe eas p e ious
esea ch co e ed much sho e pe iods ( ypically h ee o i e yea s). As a esul , we in es i-
ga e he in luence o conce ns abou sus ainabili y and ESG p inciples du ing he las decade,
including he wo mos di icul pandemic yea s, 2020 and 2021 – du ing hese wo yea s, co -
po a e e o s we e mos ly di ec ed owa ds cos con ol and su i al, he e o e sus ainabili y
ac ions became seconda y o business s a egies. Finally, a he han cons uc s like Tobin’s
Q o accoun ing-based pe o mance me ics like ROA and ROE, which a e pa icula ly p one
o managemen manipula ion (Co ne e al., 2008), we employ s ock e u ns as a measu e
o a company’s ma ke pe o mance.
To summa ize, his esea ch explo es a no el esea ch agenda by highligh ing a p e i-
ously dis ega ded indus y, de eloping a no el me hodological app oach mixing discu si e
and measu able sus ainabili y ou pu s, and b inging echnology in o he assessmen o ESG
in luence on co po a e pe o mance. The indings a e c i ical no only o execu i es planning
a ound ESG communica ions and echnological in es men s in he ace o Ne Ze o, bu also
o policymake s designing egula ions and s a egies o encou age companies o imp o e
sus ainabili y discou ses, which a e e lec ed in business alua ions.
The emainde o he pape is o ganized in o ou sec ions. The i s is he Li e a u e e-
iew, ollowed by Resea ch me hods, which de ails he da a and jus i ies he use o dynamic
panel modelling app oach. The nex sec ion highligh s and discusses he key indings. The las
sec ion concludes, examines he implica ions o ou esea ch, and ou lines po en ial a enues
o u he esea ch.
2. Li e a u e e iew
Al hough he e is no speci ic in eg a i e heo e ical amewo k dedica ed o he ela ionship
be ween sus ainabili y ac ions, discou se and co po a e pe o mance, se e al ela ed heo ies
and concep ual ames o e e ence suppo he ela ionship be ween he h ee, highligh -
ing he po en ial posi i e in luence o ESG conside a ions on a company’s inancial pe o -
156 A. Ho obe e al. ESG ac ions, co po a e discou se, and ma ke assessmen nexus: e idence om he oil and gas sec o
mance and o e all sus ainabili y. Some a e mo e ele an o he e ec s o discou se and
he e we highligh signaling heo y acco ding o which managemen will p o ide addi ional
in o ma ion as a way o deal wi h in o ma ion asymme y (Ake lo , 1970), wi h companies
egis e ing good pe o mance and p ospec s expec ed o signal his o in es o s. Along wi h
S akeholde , Agency and Legi imacy heo ies desc ibed below hey unde pin he ield o
olun a y disclosu e esea ch which explo es he a ionale behind delibe a e co po a e disclo-
su es and hei e ec s – o an o e iew and compa ison o each in he olun a y disclosu e
con ex see Co e e al. (2011).
The p oblems a e de e mined by he lack o consensus in epo ing o by selec ing indica-
o s ha show only a ou able esul s in his a ea. Wi hou a homogenous and s anda dized
basis o ESG disclosu es, i is di icul o measu e he ESG pe o mance o a i m (Ga z & Volk,
2011). Ce ainly, ESG a ings depend on he selec ed c i e ia. Some ESG c i e ia a e ela ed
o imp o emen s in ecological and/o social-e hical esul s (Cha e ji e al., 2009), whe eas
o he s mus be ega ded as ela i ely meaningless (Delmas & Blass, 2010) and his c ea es
nega i e consequences (O li zky, 2013). An inc eased le el o anspa ency is also necessa y
o he sc eening echniques used in sus ainabili y assessmen s and a ings, as in es o s need
o unde s and and ully us ESG in o ma ion and sco es.
Rega ding he ESG disclosu es ac oss economic sec o s, Baie e al. (2020) no iced ha
he heal hca e and ene gy sec o s p esen he highes sha e o ESG epo ing and disclosu es,
bu he ocus is mainly on co po a e go e nance. Díaz e al. (2020) ound ha co po a e
en i onmen al and social dimensions a e he main d i e s o ESG impac in di e en sec o s
and he en i onmen al pilla displays he weakes impac on he ene gy sec o e u ns, while
he social pilla impac s mainly on Communica ions, Real Es a e, Financial sec o , Indus ials
and Technology sec o .
A p esen , he ESG a ings indus y is highly agmen ed, and he backg ounds o i ms
a e he e ogeneous, many en e ing his business om di e en a eas o his o ical expe ise
(La cke e al., 2022). Ex an esea ch has used hese a ings o explo e wha in o ma ion
included in co po a e epo s makes i s way o ESG sco es, bu also o in es iga e he ela-
ionship be ween ESG sco e and companies’ inancial pe o mance.
The ela ionship be ween sus ainabili y epo ing and co po a e pe o mance was widely
s udied (Goyal e al., 2013), bu he esul s we e inconclusi e o mixed, because o di e en
me hodologies applied (O li zky e al., 2003). In his ein, Caesa ia and Basuki (2017) ound
a posi i e ela ion be ween sus ainabili y disclosu e and ma ke pe o mance, bu H idkjæ
(2017) eached mixed esul s on he ela ionship be ween en i onmen al and social disclo-
su es and in es o s’ e u ns, while social sc eens we e posi i ely ela ed o in es o s’ e u ns.
Be na di and S a k (2018) ound a s ong ela ionship be ween ESG disclosu es and he ac-
cu acy o o ecas ing he inancial pe o mance o bo h inancial and non- inancial i ms.
ESG epo s suppo mee ing he needs o ex e nal s akeholde s and con ibu e o a be e
alloca ion o in e nal esou ces o he companies (Villie s, 2014). Howe e , hey can only p o-
ide his o ical in o ma ion and may no be ele an o in es men decision (Lin e al., 2009) o
c ea e addi ional cos s ha may ha e nega i e impac on companies’ inancial pe o mance,
cos s ha can be ans e ed o cus ome s (Lambe on, 2005).
A i m engaged in disclosing ESG in o ma ion and ha ing a good ela ionship wi h i s
s akeholde s can achie e sus ainable co po a e pe o mance (Rezaee, 2016). Volun a y ESG
disclosu es show ha he companies a e complying wi h socie al expec a ions and no ms
(Lys e al., 2015). Besides heo e ical de elopmen s, many p e ious empi ical s udies ha e
demons a ed ha ESG epo s posi i ely in luence bo h he inancial and en i onmen al
Jou nal o Business Economics and Managemen , 2024, 25(1), 153–174 157
pe o mance o he companies ha adhe e o he ESG p inciples (Webe , 2014). Since he
mid-1990s, he posi i e co ela ion pa e ns ha e been s able o e ime in mos o he s udies.
Resea che s ha e explo ed mainly one speci ic dimension o ESG and i s ela ionship wi h
i ms’ pe o mance (Lee e al., 2016), bu a ew s udies examined all h ee ESG dimensions
in ela ion wi h i ms’ pe o mance (Ta muji e al., 2016; Bhaska an e al., 2020). Zahid e al.
(2022) in es iga ed he ela ion be ween all h ee aspec s o ESG and co po a e inancial
pe o mance o Wes e n Eu opean companies and ound he e is an ad e se impac o ESG
disclosu e and p ac ices on he inancial pe o mance o he companies, because ESG epo -
ing inc eases cos s. Howe e , acco ding o he au ho s, i also leads o inc eases in compa-
nies’ income, since cus ome s a e a ac ed o he i ms ha make e o s o implemen ESG
p ac ices and p ope ly in o m s akeholde s. Zahid e al. (2023) demons a ed ha a high ESG
pe o mance de e mines an easy access o inancing on s ock ma ke s o companies and
lowe indeb edness a io and his ela ion, pa icula ly o s a e-owned companies ope a ing
a na ional le el, compa ed o o he companies ope a ing a egional le el in China. Eliwa
e al. (2021) p o ed ha ESG disclosu e de e mines he dec ease o he capi al cos , imp o es
inancial pe o mance and he company alue.
The abo e-men ioned heo ies also explain he ela ionship be ween ac ions (ac ual ESG
pe o mance) and ma ke pe o mance. Acco ding o F eeman’s S akeholde heo y (F ee-
man, 1984), i ms a e accoun able o a wide ange o s akeholde s, including employees,
consume s, supplie s, communi ies, and he en i onmen (Pa ma e al., 2010). Fu he mo e,
he Agency heo y can be used o highligh ha ESG ac ions can align manage s’ and sha e-
holde s’ in e es s. Thus, manage s may ac in he bes in e es s o sha eholde s by e alua ing
long- e m sus ainable plans, esul ing in imp o ed business pe o mance and alue c ea ion
(Panda & Leepsa, 2017; Vel e, 2017). Legi imacy heo y is ocused on he company’s need
o ope a e wi hin he bounds o socie y’s alue sys em. An o ganiza ion will seek o gain
he suppo o s akeholde s and alle ia e hei conce ns pa icula ly in he wake o a majo
nega i e e en such as he 2010 Deepwa e Ho izon disas e (B eeze, 2012). Among he
le e s used a e ac ions and discou se ela ed o ESG. The O&G sec o is con on ed wi h a
p essing equi emen o secu e i s legi imacy in he con ex o he ene gy ansi ion, making
he heo y highly ele an .
The Resou ce-Based View (RBV) heo y can be also used o emphasize ha companies
ha e ec i ely manage ESG issues can s eng hen hei compe i i e ad an age by de el-
oping in angible asse s such as s ong b and epu a ion, inno a ion capabili ies, and social
capi al (Locke e al., 2009 o a good o e iew o RBV). Addi ionally, because i e alua es
pe o mance in h ee dimensions – inancial, social, and en i onmen al – he T iple Bo om
Line amewo k may be c edi ed wi h in eg a ing ESG ac o s in o company ope a ions. As a
esul , by add essing ESG conce ns, businesses can os e us and posi i e connec ions wi h
s akeholde s, esul ing in enhanced loyal y, a be e epu a ion, and long- e m sus ainable
pe o mance e en in he ace o ma ke ad e si y (Huang, 2021).
Kim and Li (2021) ound a posi i e ela ion be ween he o al ESG sco e and i s co po a e
go e nance dimension, on he one hand, and co po a e pe o mance, on he o he hand,
based on obse a ions du ing 1991–2013. Kim and Li (2021) also ound ha , excep he en-
i onmen al dimension, o al ESG sco es and he o he wo dimensions signi ican ly impac
on co po a e c edi a ings and, hus, on co po a e isk. Qu eshi e al. (2021) ound a posi i e
ela ion be ween ESG ac o s and ma ke -based inancial pe o mance o companies, bu
only mixed e idence o he ela ion be ween ESG ac o s and accoun ing-based inancial
pe o mance o US co po a ions du ing 2009–2018. ESG sco es a e di ec ly and indi ec ly
158 A. Ho obe e al. ESG ac ions, co po a e discou se, and ma ke assessmen nexus: e idence om he oil and gas sec o
in luenced by he i m’s size and i s a ailable esou ces, and his means ha la ge compa-
nies bene i om a highe ESG sco e. The e o e, no always an ESG sco e can bes p edic an
imp o emen in he co po a e sus ainable pe o mance (D empe ic e al., 2020).
Bi gden e al. (2009) ha e s udied he ESG ole o managemen in es men decisions
in eme ging ma ke s and ound ha co po a e social esponsibili y (CSR) displays a g ea e
impo ance han en i onmen al social esponsibili y (ESR) in eme ging ma ke s like China,
B azil, India o Sou h Ko ea. They conside ESG as a ool o co e ing he managemen isk,
a he han a ool o inc easing he ma ke alue o a company in he long- un.
Based on he iden i ied esea ch gap in he exis ing li e a u e, he pape ’s esea ch goal is
o conduc a comp ehensi e in es iga ion o he ela ionship be ween sus ainable ac ions and
business pe o mance in he global O&G sec o , media ed by co po a e communica ions on
sus ainable p ac ices. Thus, he majo esea ch ques ion we examine is whe he he in ensi y
o companies’ sus ainabili y he o ic is e lec ed in bo h ESG sco es and s ock ma ke alue
( h ough s ock e u ns). As p e iously s a ed, examining he ela ionship be ween co po a e
communica ions on sus ainable ac ions and s ock ma ke alua ion is c i ical gi en he g ow-
ing in e es in ESG- ela ed opics in he in es men communi y, pa icula ly o a sec o wi h
signi ican exposu e o po en ial sus ainabili y isks.
3. Resea ch me hodology
The main objec i e o ou pape is o s udy he link be ween co po a e sus ainabili y discou se,
ESG sco es and inancial pe o mance in he O&G sec o . To each his objec i e, we imple-
men ed a wo-phase analysis, desc ibed in Figu e 1. In he i s phase, using he la en Di ichle
alloca ion (LDA) model, QECs o 45 companies om he O&G sec o ha e been sea ched based
on a comp ehensi e and ele an lis o sus ainabili y- ela ed wo ds on ou dimensions: en i-
onmen (E), social (S), go e nance (G) and echnology (T) – he lis o wo ds is a ailable om
he au ho s. Then, we calcula ed he equencies o sus ainabili y- ela ed wo ds in QEC o each
yea included in he analysis, which became he undamen al blocks o he second s age o ou
analysis. In he second s age, applying panel da a me hods ( andom e ec s panel eg essions
and dynamic panel GMM es ima o s) we es ed he link be ween companies’ sus ainabili y dis-
cou se e lec ed in equencies and ESG sco es – sub-s age (1), – he ela ionship be ween he
sus ainabili y discou se and ma ke pe o mance – sub-s age (2), and he associa ion be ween
ESG sco es and companies’ ma ke pe o mance, embedded in annual e u ns – sub-s age (3).
Fi ms we e selec ed om US, Eu ope and Canada, because he e a e la ge di e ence in e ms
o sus ainabili y iendly p ac ices in Eu ope compa ing o US o Canada and he way companies
communica e ha o in es o s. Sus ainabili y epo ing is manda o y o big public in e es s
companies he EU (Vande Bauwhede & Van Cauwenbe ge, 2022).
Building on he heo e ical amewo k desc ibed in he li e a u e e iew sec ion, we lis
he ollowing hypo heses o he ela ionships desc ibed abo e.
Hypo hesis 1: Sus ainabili y discou se is posi i ely ela ed o ESG sco es.
This can be explained by he ac ha companies wi h s ong pe o mance in his a ea
would be likely o emphasize i , acco ding o signaling heo y. The ela ionship be ween
sus ainabili y discou se and ma ke pe o mance is less clea . As QECs ha e limi ed ime, i a
business’s managemen pu sues ESG o echnology hemes and p omp s ela ed que ies, i
is easonable o assume ha i belie es he company has a compe i i e ad an age ega ding
hese opics, in line wi h RBV heo y, and ha discussion will posi i ely a ec he ma ke ’s
Jou nal o Business Economics and Managemen , 2024, 25(1), 153–174 159
alua ion o he company. Hence, a s ong ESG o echnology ocus in co po a e QECs should
esul in posi i e ma ke pe o mance. The e o e, we s a e ha :
Hypo hesis 2: Sus ainabili y discou se posi i ely impac s he ma ke pe o mance o co po-
a ions.
Ne e heless, en i onmen al achie emen s can be o e emphasized, leading o allega ions
o so-called g eenwashing, and so oo can echnological ones. Fu he mo e, managemen can
choose o ocus on hese opics o de ac om poo ope a ional o inancial pe o mance.
This makes he ela ionship be ween his ype o co po a e discou se and ma ke pe o -
mance unclea . Howe e , when iewed h ough he lens o legi imacy heo y, companies a e
expec ed o ma ch discou se wi h ac ion in o de o add ess s akeholde conce ns, else isk
losing suppo and legi imacy. Due o he inc eased ocus on ESG conce ns in ecen yea s,
we expec a posi i e co ela ion be ween ESG sco es and ma ke pe o mance wi h he ca ea
ha such sco es a e an impe ec measu e o a company’s ac ual pe o mance, as no ed in
he p e ious sec ions. As pos ula ed by Agency heo y, ESG ac ions may se e o p o e ha
managemen is aiming o long e m alue c ea ion in line wi h sha eholde in e es s, sup-
po ing ma ke ou comes. Mo eo e , since such ESG conside a ions se e he in e es s o a
b oad ange o s akeholde s o which he company is accoun able (as sugges ed by S ake-
holde heo y), bene i s can be de i ed such as epu a ion and ease in secu ing alen . These
may u he aid ma ke e u ns. Thus, we s a e ha :
Hypo hesis 3: The ESG sco e posi i ely impac s he ma ke pe o mance o he companies.
Figu e 1. Resea ch phases (sou ce: au ho s’ design and ep esen a ion)
Phase 1. ESG and echnology in o ma ion in companies’ discou ses
The co po a e discou se is ep esen ed by ansc ip s o QECs, a sui able communica ion
channel since i is no unde he ull con ol o he company. These ypes o e en s ypically
include a ques ions and answe s sec ion in which analys s can que y managemen on a ious
opics o ele ance. The ansc ip s we e sou ced om NASDAQ o he 2011–2021 pe iod o
45 lis ed companies in he Oil, Gas & Consumable Fuels GICS – Global Indus y Classi ica ion
S anda d sec o o ma ke pa icipan s (MSCI, 2023). The numbe o companies in he sample
was limi ed by he a ailabili y o ESG sco es p o ided by Re ini i o e he en i e pe iod. The
lis o companies is a ailable om he au ho s.
160 A. Ho obe e al. ESG ac ions, co po a e discou se, and ma ke assessmen nexus: e idence om he oil and gas sec o
Since ou da ase is es ic ed o O&G companies, we op o cons uc ing a sec o -spe-
ci ic wo d lis and measu ing he in ensi y o selec ed opics by compu ing he equencies
o ele an wo ds. The challenge lies in cons uc ing a comp ehensi e lis o wo ds o each
opic, bu he e a e ad an ages o using a sec o -speci ic app oach due o polysemy and
idiosync a ic con ex s o di e en indus ies. We also use a combina ion o machine lea ning
and manual labelling wi h he applica ion o he LDA model in oduced by Blei e al. (2003).
An in-dep h discussion on he me hod is p o ided by S ey e s and G i i hs (2007). The wo ds
we e chosen om among he op 100 wo ds (wi h he highes p obabili y sco es) in each
a ea. A e compiling he wo d lis , we calcula e he equency o each o he ou ca ego ies
o each company e e y yea , di iding he numbe o occu ences in each ansc ip by i s
leng h, a e excluding simila pa ag aphs and wo ds emo ed du ing p e-p ocessing. Calcula-
ions we e pe o med in Ma lab.
Phase 2. Linking sus ainabili y discou se o ESG sco es and co po a e ma ke pe o -
mance
The second s age o ou esea ch is buil on he equencies o E, S, G and T ela ed wo ds
and in es iga es he link be ween sus ainabili y discou se o companies in he O&G indus y
and hei ma ke pe o mance. We p oceed in h ee sub-s ages, as ollows.
Sub-s age 1. Sus ainabili y discou se and ESG sco es
We examine he signi icance o sus ainabili y discou se – E, S, and G – o ESG sco es,
wi h he goal o de e mining whe he co po a e manage s’ communica ions o ma ke in es-
o s in sus ainabili y a e inco po a ed in o ESG sco es. We collec ed he ESG sco es and hei
h ee componen s om Re ini i o e he 2011–2021 pe iod. The sco es a e based on o e
630 business-le el ESG measu es, which a e u he combined o p o ide he E, S and G pilla
a ings (Re ini i , 2022). The ESG sco e is a ela i e sum o he weigh s o E and S, which a y
by indus y, while he weigh s o G a e he same ac oss all indus ies. Fo he O&G sec o ,
he weigh s a e 34.5% o E, 42% o S, and 23.5% o G.
We used panel da a eg ession o model he associa ion be ween co po a e discou se and
ESG sco es. Panel models a e a well-es ablished econome ic ool because o hei abili y o
wo k wi h small samples and addi ional bene i s such as less collinea i y, con olled he e o-
genei y, mo e deg ees o eedom, and highe e iciency in iden i ying and measu ing ela-
ionships be ween economic (and o he ) phenomena (Bal agi, 2005). Fu he mo e, he GMM
amewo k’s lexibili y is be e sui ed o unbalanced panels and handles many endogenous
a iables well (Roodman, 2007).
The es ima ed panel model is based on Woold idge (2010) and akes he o m below:
, 1, and 1, ,
i i i i i i
Y X Ti N=α +β +γ +ε = … = …
(1)
whe e Yi is he dependen a iable, Xi deno es he se o independen a iables, and βi
designa es he es ima ed coe icien s. Indi idual e ec s (company e ec s) a e included in he
model by γi and εi is he idiosync a ic model e o .
In his speci ica ion ESG sco e is he dependen a iable and co po a e discou se equen-
cies a e independen a iables. All a iables a e loga i hmically ans o med o achie e mo e
no mal dis ibu ions. Table 1 lis s he a iables examined in his s udy.
We begin by es ima ing a basic pooled o dina y leas squa es (OLS) panel and es ing
o he p esence o i s unde lying assump ions using he Du bin-Wa son es o au oco -
Jou nal o Business Economics and Managemen , 2024, 25(1), 153–174 167
iga ed in he cu en s udy, O&G, wi h a s ong en i onmen al oo p in , bu ma ked by
consis en e o s made by companies o in es in p o ec ing he en i onmen and con ince
in es o s o hei en i onmen ally-conscious beha iou .
The ele ance o echnology opics in co po a e discou se o O&G company s ock e u ns
was es ima ed in he nex s ep (see Table 5). As in he case o esul s epo ed in Table 4, he
di e ence and sys em-GMM esul s a e e y simila . In es o s pay a en ion o in o ma ion in
QECs ela ed o echnology ad ances ela ed o sus ainable p ac ices, and business a emp s
o con ey hei ac ions in his a ea a e e lec ed in highe e u ns. All s a is ically signi ican
coe icien s a e consis en ac oss he ou models: posi i e o con empo aneous T_FREQ bu
nega i e o 1-yea lagged alues. When T_FREQ inc eases by 1%, O&G companies’ s ock
e u ns inc ease by 18–44%, depending on he model. The nega i e coe icien s o lagged
T_FREQ we e unexpec ed, and hey may s em om he cyclical na u e o he business, wi h
al e na ing pe iods o high and low e u ns. Discussion a ound echnology opics may be
mo e sensi i e o such condi ions, being deemphasized du ing a down u n, as appea s o
be he case o he 2014–2016 pe iod. The posi i e coe icien s o ESG_FREQ also imply ha
comp ehensi e sus ainabili y epo ing in all ele an a eas con ibu es o imp o ed s ock
e u ns in he O&G sec o .
Table 5. Technology discou se o pe o mance: esul s o panel GMM es ima es (sou ce: au ho s’
wo k)
I e a ed di e ence GMM I e a ed sys em-GMM
Va iables 13 14 15 16
Dependen : LOGRET
LOGRET(-1) –0.386*** –0.386*** –0.262*** –0.087
LOGESG_FREQ 0.114** 0.076*
LOGESG_FREQ(-1) 0.012 0.119*
LOGT_FREQ 0.446*** 0.181* 0.271** 0.042
LOGT_FREQ(-1) –0.141*** –0.116*** –0.096*** 0.031
LOGLEV –1.154 1.791* –1.885 –3.663***
LOGMKC 0.805 0.759*** 0.483 0.315
LOGBRENT –0.413*** –0.381*** –0.231* –0.391**
Obse a ions 431 409 431 409
Cons an 6.055*** –0.565 –3.447 –0.689
AR(2) 0.337 0.341 0.443 0.542
Hansen s a is ic 0.337 0.382 0.081 0.633
No e: ***, ** and * deno e s a is ical signi icance a 1%, 5% and 10% le el, espec i ely. The able epo s z- es s and
co esponding p- alues.
Finally, Table 6 displays he GMM es ima es o he ela ionship be ween ESG sco es and
s ock e u ns. The indings – e y simila o he di e ence e sus sys em-GMM - e eal ha
in es o s ac o hese a ings in o he alua ion o O&G i ms, and ha supe io sus ainabili y
pe o mance ansla es in o highe e u ns. Imp o emen s in he o al ESG sco e and in each
o i s componen s esul in highe e u ns o O&G en e p ises. Thus, a 1% ise in ESG sco es
leads o a 196% highe e u n (Model 22), bu an inc ease in ENV sco es esul s in a 56–239%
168 A. Ho obe e al. ESG ac ions, co po a e discou se, and ma ke assessmen nexus: e idence om he oil and gas sec o
Table 6. ESG sco es o pe o mance: esul s o panel GMM es ima es (sou ce: au ho s’ wo k)
I e a ed di e ence GMM I e a ed sys em-GMM
Va iables 17 18 19 20 21 22 23 24 25 26
Dependen :
LOGRET
LOGRET(-1) –0.302* –0.170 –0.197 –0.012 0.105 –0.292** –0.221 –0.314*** –0.191** –0.153
LOGESG 2.511 1.965**
LOGESG(-1) –1.927 –1.348*
LOGENV 2.397* 0.045 1.218** 0.557*
LOGENV(-1) –1.890 –0.594 –0.825** 0.531*
LOGSOC –1.071 –3.746 0.888* 0.813*
LOGSOC(-1) 1.696 4.465 –0.439 –0.557
LOGGOV 1.971* 2.039 0.377 0.294
LOGGOV(-1) –1.097 –1.067 0.105 0.219
LOGLEV 0.696 3.705* –0.203 0.045 0.938 0.704 1.654 0.555 0.869 0.287
LOGMKC 1.054 0.985* 1.075 1.260* 2.385 1.013*** 0.941*** 0.833* 0.9488 0.714***
LOGBRENT –0.256 0.318 –0.446 –0.639* –1.323 –0.255 0.0574 –0.134 –0.252* 0.024
Obse a ions 413 407 412 412 407 412 407 412 412 407
Cons an 10.964 –11.567** –10.729*** –13.019 –23.626 –10.608*** –10.192 –8.649 –9.979*** –8.454***
AR(2) 0.345 0.888 0.249 0.159 0.599 0.16 0.972 0.742 0.706 0.935
Hansen
s a is ic 0.230 0.506 0.172 0.43 0.826 0.678 0.296 0.222 0.0956 0.385
No e: ***, ** and * deno e s a is ical signi icance a 1%, 5% and 10% le el, espec i ely. The able epo s z- es s and co esponding p- alues.
Jou nal o Business Economics and Managemen , 2024, 25(1), 153–174 169
inc ease in e u ns (Models 18, 23 and 26). Re u ns inc ease by 88% when he SOC sco e ises
by 1% (Model 24), and by 197% when he GOV sco e ises by 1%. (Model 20). This shows
ha he implemen a ion o ESG p ac ices p o ides signi ican and angible inancial bene i s
o O&G en e p ises. Mo eo e , we con i m he posi i e associa ion be ween ESG disclosu es
and ma ke pe o mance o i ms demons a ed in p e ious s udies (Caesa ia & Basuki, 2017;
H idkjæ , 2017; Kim & Li, 2021). A he same ime, he esul s o his s udy do no alida e
he conclusion eached by Deme s e al. (2021) ha good ESG sco es do no o e p o ec ion
o in es o s in imes o ma ke c ashes and ola ili y. Mos likely, his di e gence is explained
by he en yea s’ ime ame used in his esea ch, which may allow o a longe - e m mani-
es a ion o sha eholde alue c ea ion in companies.
All es ima ions and models show ha s ock e u ns a e pe sis en o e ime, as e idenced
by he s a is ically signi ican coe icien s, bu e u n co ec ions om one yea o he o he
a e o be expec ed o O&G companies. These indings suppo he long- e m pe sis ence o
s ock e u ns (Lo & MacKinlay, 1988).
When he con ol a iables a e conside ed, ou indings sugges ha highe sized compa-
nies end o p o ide in es o s wi h highe e u ns. This may be explained by he di e si ica ion
oppo uni ies hey p o ide, a b oade ange o p oduc s and se ices, and a la ge clien base,
which ansla es in o highe in es o s’ con idence (Ma ani e al., 2009). A he same ime, ou
es ima ions e idence ha inc eases in he oil p ice led o lowe e u ns, which con i m he
esul s o D iesp ong e al. (2008) who conclude ha in es o s unde eac o in o ma ion in
he oil p ice. In he case o le e age (LEV), u he analysis on how i impac s he link be ween
co po a e sus ainable p ac ices in he O&G indus y is needed. The p esence o a s a is ically
signi ican link be ween size, he p ice o oil and e u ns in ou indings con i ms he p e i-
ous indings o Bianconi and Yoshino (2014) in hei analysis o O&G companies e u ns as
opposed o enewable ene gy companies. Also, we suppo Na ayan and Sha ma (2011), who
concluded ha o highe sized companies he ela ionship be ween oil p ices and e u ns
appea s o be mo e s a is ically signi ican bu nega i e.
The diagnosis es s show ha ou ins umen s a e alid (Hansen s a is ics abo e 0.05)
and he e is no se ial co ela ion in esiduals (AR(2) abo e 0.05). The e o e, ou es ima ions
a e consis en and solid.
5. Conclusions
Ou pape con ibu es o he ex an li e a u e by obse ing he ela ionship be ween co po-
a e ESG discou se, ESG sco es, and ma ke pe o mance o co po a ions in he global O&G
sec o , which a e di ec ly exposed o he ull ange o ESG issues. These companies need o
manage hei impac on he en i onmen , as well as he ela ionships wi h local communi ies.
Mo eo e , he adi ional business model in he O&G sec o is unde p essu e, as he ene gy
ansi ion de e mines companies o shi owa d enewable and clean ene gy, while emaining
compe i i e and p o i able.
The wo-s age esea ch app oach ollowed in he pape aimed a explo ing whe he he
in ensi y o co po a e discou se a ound sus ainabili y opics is ele an o ESG pe o mance,
asce aining i s signi icance o in es o s ia he impac on e u ns, and de e mining whe he
he e is a connec ion be ween ESG sco es and ma ke pe o mance.
Ou indings show ha in es o s conside bo h sus ainabili y discou se and esul s in
hei assessmen o a company’s alue. Mo eo e , we alida e he ole o ESG sco es and
ankings in p o iding in es o s wi h an accu a e and meaning ul assessmen o companies’
170 A. Ho obe e al. ESG ac ions, co po a e discou se, and ma ke assessmen nexus: e idence om he oil and gas sec o
sus ainabili y ac ions. Fu he , we a gue ha an emphasis on sus ainabili y p ac ices and hei
consis en communica ion o in es o s can lead o be e e u ns. The no el con ibu ions
o he p esen pape a e mul iple. Fi s , we de i e an ESG ocabula y pa icula o he O&G
indus y. Such an endea ou has been a emp ed in he li e a u e o a wide ange o sec-
o s, bu o ou knowledge a de ini i e ocabula y has ye o be compiled. Ano he elemen
o no el y is he inclusion o he echnology ca ego y in he sus ainabili y assessmen o
co po a e communica ion. Finally, he co po a e sus ainabili y ac ion, discou se and ma ke
assessmen iad has, as a as we know, no been s udied in such a comp ehensi e manne .
The indings o ou esea ch a e o impo ance o ma ke p ac i ione s, ha can use hem
o calib a e hei po olios o sus ainable en e p ises and ine une hei in e ac ions o co -
po a ions. Addi ionally, co po a e execu i es may be e unde s and how he ESG ini ia i es
a e inco po a ed in o he b oade measu emen o pe o mance and alue. A he wide
economy le el, ou indings highligh he signi icance o encou aging companies, pa icula ly
hose in sec o s and indus ies sensi i e o ESG ac o s, o in es in ESG ini ia i es, as his is
accompanied no only by cos s bu also by imp o ed pe o mance, which makes hem mo e
a ac i e and be e posi ioned o a ac inancing.
The pape limi a ions a e inhe en ly embedded in he da a, ime ame unde s udy, and
econome ic models used. Ce ainly, ex ending he analysis o e a highe numbe o com-
panies in he O&G sec o , co e ing o mo e coun ies, would ha e p o ided mo e insigh
in o he ela ionship be ween ESG ac o s and co po a e pe o mance, bu he main obs acle
is ep esen ed by he ime ame o ESG sco es a ailabili y. Also, panel econome ic models
ha dis inguish be ween he sho - e sus long- e m in e ac ion be ween ESG p inciples and
e u ns (such as ARDL o QARDL) migh be pa icula ly use ul, and we in end o pu sue his
esea ch a enue in he u u e. Ano he in e es ing esea ch di ec ion is he s udy o he e-
la ionship be ween co po a e discou se and o he i m cha ac e is ics (e.g., loca ion, subsec-
o o ac i i y). Mo eo e , i would be allu ing o obse e whe he he cu en en i onmen ,
cha ac e ised by an emphasis on ene gy secu i y and addi ional axa ion on O&G company
p o i s, will de ac om ESG conce ns in QECs.
Funding
This p ojec was inanced by Lucian Blaga Uni e si y o Sibiu h ough he esea ch g an
LBUS-IRG-2022-08.
Au ho con ibu ions
AH, VB and MG concep ualized he s udy. AH and VB we e esponsible o o e all design and
econome ic da a analysis. LB and DGD we e esponsible o da a collec ion and in e p e a-
ion o esul s. MG su eyed he li e a u e and w o e he Li e a u e e iew sec ion o he
pape . All au ho s con ibu ed o he i s d a and he inal e sion o he a icle.
Disclosu e s a emen
The au ho s decla e no ha ing any compe ing inancial, p o essional, o pe sonal in e es s
om o he pa ies.
Jou nal o Business Economics and Managemen , 2024, 25(1), 153–174 171
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