ESG Performance, Disclosure and Environmental Intensity: Implications for Profitability in Emerging Market Energy Companies

This study examines the relationship between ESG performance, environmental intensity, greenwashing, and profitability in energy companies operating in emerging markets. An unbalanced panel of 95 publicly listed companies from Asia, Europe, and Latin America over 2015–2024 is analyzed using dynamic panel‐data models. ESG performance is found to be positively associated with profitability, while environmental intensity exerts a negative effect. The positive impact of ESG performance is stronger in larger companies, suggesting that organizational scale enhances the benefits derived from sustainability initiatives. Greenwashing, measured as the gap between ESG disclosure and ESG performance, is negatively associated with profitability, indicating that sustainability claims are penalized when they are not supported by actual ESG outcomes. The results also show that the COVID‐19 pandemic and the Russia‐Ukraine conflict reduced the profitability penalty associated with greenwashing. The findings highlight the importance of disclosure credibility and ESG performance in emission‐intensive industries.