The Relationship Between ESG Metrics and Financial Performance of an Enterprise in the Oil and Gas Sector

¹ Institute of Industrial Management, Graduate School of Economics and Engineering, St. Petersburg, Russian Federation
² Tashkent State University of Economics, Department of Tax and Taxation, Tashkent, Uzbekistan
³ “Tashkent Institute of Irrigation and Agricultural Mechanization Engineers” National Research University, Tashkent, Uzbekistan

^* Corresponding author: b.ibragimov@tsue.uz

Abstract

This article explores the relationship between ESG (environmental, social and corporate governance) indicators and the financial performance of enterprises. It analyzes data from companies included in the RAEX ESG rating in order to build a linear regression model that demonstrates the dependence of financial indicators, such as return on equity (ROE) and return on assets (ROA), on factors related to sustainable development. The results showed that company performance in the area of sustainability on the E-rating reduces the variability of stock returns and the efficiency of assets use, while increasing return on equity; a rise in the rating on the S indicator leads to an increase in all selected financial indicators of the company; an increase in the G-ranking has a negative effect on stock volatility, but leads to a decrease in return on equity and assets. Components of an ESG rating, especially corporate governance indicators, can both positively and negatively impact company financial performance. The modeling results confirm the existence of a significant relationship between the implementation of sustainable development principles and the financial results of companies, which emphasizes the importance of taking into account ESG factors when assessing the performance of enterprises and making investment decisions. The study provides data for further inquiry into the role of sustainable development in improving the financial performance of enterprises and forming effective management strategies.