ANNOUNCEMENTS
This study examines the impact of Environmental, Social, and Governance (ESG) performance on the cost of capital within the oil and gas sector, a high-risk, high-emissions industry encountering increasing investor and regulatory scrutiny. Using a mixed-methods approach, the study analyses data from 30 firms listed in the Dow Jones Oil & Gas Titans 30 Index. Simple and multiple linear regressions explore the relationship between S&P Global ESG scores and key financial metrics: cost of equity (Re), cost of debt (Rd, Rda), and weighted average cost of capital (WACC). Results demonstrate that higher ESG scores are significantly associated with lower Re, Rda, and WACC. Furthermore, firm size moderates these relationships, with larger firms benefiting more strongly from ESG improvements. Expert surveys confirm the financial materiality of ESG performance, particularly for equity investors. The study contributes to ESG-finance literature by providing sector-specific analysis and practical implications for corporate managers, investors, and policymakers. It emphasizes ESG integration as both an ethical imperative and a strategic financial lever in capital-intensive, sustainability-challenged industries like oil and gas.
Keywords: ESG performance; cost of capital; oil and gas sector; cost of equity; WACC; firm size; ESG finance; regression analysis; investor perception; S&P Global ESG scores.
