Impact of Environmental, Social, and Governance on the Profitability of National Oil Companies: A Case Study of Nigerian National Petroleum Company Limited
Abstract
This study examines the impact of Environmental, Social, and Governance (ESG) factors on the profitability of the Nigerian National Petroleum Company Limited (NNPC Limited) following its transition into a commercially oriented entity under the Petroleum Industry Act. Using a mixed methods approach, the study integrates longitudinal ESG and financial data with qualitative insights from key stakeholders. The findings suggest that improvements in governance, environmental management, and social engagement are positively correlated with stronger economic performance, as measured by return on assets, return on equity, net margins, and operational efficiency. Governance reforms exhibit the most decisive influence, underscoring the centrality of transparency, accountability, and audit quality in shaping financial outcomes. Environmental and social initiatives also contribute by reducing operational disruptions, mitigating risk, and strengthening community relations. The results highlight ESG integration as a strategic pathway to enhance competitiveness, attract sustainable financing, and position NNPC Limited in line with global expectations for the energy transition. Recommendations emphasize deepening governance reforms, strengthening environmental controls, and aligning CSR with long-term community development.