ESG Governance, Renewable Energy Adoption, and Corporate Financial and Environmental Performance: Evidence from US-Listed Firms

Abstract

The global energy sector is undergoing rapid and, in many respects, irreversible transformation driven by the convergence of digital disruption, sustainability mandates, and shifting investor expectations. Technologies such as artificial intelligence (AI), blockchain, and digital twin systems are fundamentally reshaping energy operations and strategic decision-making, while ESG governance quality and renewable energy adoption have emerged as two of the most consequential determinants of corporate financial competitiveness and equity valuation. Despite growing practitioner and regulatory interest in these dynamics, limited empirical evidence exists on how ESG governance, renewable adoption, and digital disruption jointly influence financial performance and environmental outcomes across multiple sectors simultaneously. This study addresses that gap using panel data from 26 large-cap US-listed firms across five sectors over 2015–2022 (N = 208 firm-year observations for Revenue/Market Cap/ROA models; N = 91 for the CO2 model). A multi-method econometric framework is employed, comprising Fixed Effects and Random Effects panel regression with Hausman specification testing, Difference in Differences quasi-experimental analysis, and sequential OLS path analysis with HC3 robust standard errors. Three of four hypotheses are supported. ESG governance quality generates a significant market capitalisation premium of approximately 10–14% per unit Bloomberg ESG Score improvement, after controlling for firm size and R&D intensity; no significant revenue channel effect is found once firm size is properly accounted for. Renewable energy adoption shows a marginal association with market capitalisation at the 10% significance level (FE β = 0.019, p = 0.086; RE β = 0.016, p = 0.077), suggesting capital markets may price clean energy adoption as a forward-looking signal. ESG governance quality drives within-firm CO2 emission reduction substantially more powerfully than renewable energy quantity alone, with the Fixed Effects estimator identifying a governance-led eco-efficiency mechanism. Firm profitability functions as a cross-model financial capacity moderator, enabling simultaneous ESG investment and environmental improvement. The findings carry direct implications for corporate managers, institutional investors, and policymakers aligned with SDG 7, SDG 9, and SDG 13.