The effect of transition to renewable energy on stakeholders of energy companies

: analyses of energy companies' financial and non-financial performance indices

Abstract

Due to sustainability concerns globally, energy firms are increasingly under the pressures of stakeholders to adopt environmental performance management strategies. Consequently, some firms that produce fossil fuel energy are transitioning to renewable energy production. But due to the divergent interest of the stakeholders in the energy sector, there are concerns on the effect of such environmental performance management initiatives on the firms' Key Performance Indicators (KPI). Therefore, this study investigates whether the energy transition has a significant effect on energy companies' financial, environmental, social performance, and audit fees indicators. The study was conducted on 256 energy companies sampled across the globe for the period 2006 to 2018. The data comprises metrics from the World Bank database, and other indicators are from the annual reports of energy companies collected from the Datastream database. Panel models were used to test the hypotheses, and Hausman's specification test selected a more robust model between the fixed and random effect models. The study did not find evidence to conclude that energy transition has a significant effect on leverage, waste pollution, and social performance indicators (accidents rates and staff training and development). Other analyses have shown that energy transition directly affects liquidity and audit fees but indirect effects on carbon emission intensity and the three proxies of corporate performance indicators (ROA, Tobin's q and EPS). This study recommends that the relevant authorities support firms transitioning with economic incentives to absolve the short-run transition losses. It also recommends the standardisation of green policies to aid free-market competition. Lastly, this study recommends incorporating social issues into strategic planning to encourage employees to boost energy transition.

Date of Award	25 Jan 2022
Original language	English
Awarding Institution	Abertay University
Sponsors	Tertiary Education Trust Fund (TETFUND)
Supervisor	Reza Kouhy (Supervisor) & Samuel Sunday (Supervisor)