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This study investigates the threshold effects of Environmental, Social, and Governance (ESG) performance on the energy efficiency of policy in the European energy sector. The relative efficiency of ESG-driven policies across multiple European countries during fiscal years 2022 and 2023 is evaluated using a hybrid Multi-Criteria Decision-Making (MCDM) framework that integrates the TOPSIS method and entropy weighting. The entropy method guarantees an objective weight allocation based on data variability, whereas TOPSIS enables a transparent classification of countries by assessing their proximity to an ideal ESG-performance profile. The methodological stability of the approach is underscored by the sensitivity analysis, which confirms the robustness of the rankings under differing weight scenarios. We have discovered that the governance dimension, particularly internal auditing, and environmental metrics, such as resource utilization, substantially contribute to the enhancement of policy energy efficiency. In contrast, social dimensions have a marginal impact, indicating the necessity of more comprehensive strategies. This research contributes to the development of sustainable energy policies by providing a data-driven and replicable evaluation model. It also offers policymakers and investors practical insights to support the implementation of ESG-aligned energy transition initiatives throughout Europe.
Ζουρνατζίδου et al. (2025) studied this question.