The impact of environmental performance of oil and gas companies on their financial performance

Abstract

Oil and gas companies are under the scrutiny of investors and counterparties, among which today there is a growing commitment to complying with environmental management criteria and socially responsible investment and development. This study is devoted to the analysis of the impact of environmental management criteria on the financial performance of oil and gas companies. Compliance with the principles of environmental management contributes to the stable development of companies in the oil and gas sector and increases the attractiveness for investors. Regression analysis of panel data covering 2002–2020 was performed on the basis of assessments of compliance with environmental management within the framework of the ESG rating. The novelty of the study lies in the high detail of the data, the focus on oil and gas companies in developed and emerging economies, and taking into account the specific characteristics of the sample. The analysis of compliance with the principles of environmental management, as part of the ESG strategy, in companies in the oil and gas sector complements the results of broader studies of the energy sector. The purpose of the study is to study the relationship between environmental management criteria and the financial performance of oil and gas companies, in particular their market value (Stock Return, Tobin’s Q) and accounting financial indicators (ROA, ROE).

The practical significance of the work lies in the formulation of conclusions about the impact of environmental management criteria on the success of oil and gas companies. The results of the study are useful in making strategic decisions by companies in the industry under study and can also be used by investors when choosing assets to form an investment portfolio.

References

Bryukhova, E. S. (2017). How to make SEM eff ective. Standards and quality, 5, 32–33.

Gorbunova, O. I. (2017). Environmental management in Russian oil and gas companies: rating of environmental responsibility. Bulletin of the Baikal State University, 27(3), 366–371.

Kiryushin, P. A. (2019). Factors of environmentally sustainable development and “green” economy in Russia. Bulletin of Moscow University. Series 6. Economy, 1, 122–138.

Kiryushin, P. A., Yakovleva E. Yu., Astapkovich M., & Solodova M. A. (2019). Bioeconomics: EU experience and opportunities for Russia. Bulletin of Moscow University. Series 6. Economy, 4, 60–77.

Murashko, M. M. (2021). Consequences of the introduction of a new EU carbon tax for the EAEU. Problems of the post-Soviet space, 8(3), 369–378.

Report ESG Data: Dazed and Confused. https://insights.factorresearch.com/researchesg-data-dazed-and-confused/

Report Oil & Gas Investor Survey (2020). https://www.bcg.com/en-es/publications/2020/infographic-oil-gas-investor-survey

Report Global Energy Statistical Yearbook. https://www.enerdata.net/publications/world-energy-statistics-supply-and-demand.html

Report World Energy Outlook (2020). https://www.iea.org/reports/world-energyoutlook-2020

Pakhomova, N. V. (2016). New environmental management tools in the ISO 14001:2015 standard as a factor in the sustainable development of oil and gas enterprises in Russia. Oil industry, 9, 124–128.

Plakitkina, L. S., Plakitkin, Yu. A., & Dyachenko, K. I. (2021). Decarbonization of the economy as a factor infl uencing the development of the coal industry in the world and Russia Ferrous metallurgy. Bulletin of scientific, technical and economic information, 77(8), 902–912.

Skobelev, D. O. (2019). Ecological industrial policy: main directions and principles of formation in Russia. Bulletin of Moscow University. Series 6. Economy, 4, 78–94.