The moderating role of digitalization in the impact of ESG on financial performance: An empirical analysis on the energy and utilities sectors

In recent years authorities and regulators around the world are showing great interest in the concept of sustainability (Zhou et al., 2022). Sustainable practices are a growing phenomenon around the world and there is increasing research on the correlation between ESG (Environmental, Social and Governance) and corporate financial performance (Alsayegh et al., 2020; Velte, 2017). In parallel with the increasing focus on ESG digitalization has taken center stage in the business environment. We use panel data regression using pooled ordinary least squares (OLS), fixed effect or LSDV (Least squares dummy variable) and random effect model, with a twofold aim: first we investigate the relationship between ESG factors and financial performance; then we try to understand how digitalization influences that relationship. The panel covered by our study consists of a sample of listed companies belonging to the Energy and Utilities sectors observed from the year 2018 to 2021. In particular, our data set includes financial indicators closely related to the corporate profitability, sustainability indicators and an indicator use as a proxy of digitalization. Finally we expect to obtain results that can provide an understanding of how digitalization can moderate the relationship between ESG and profitability goals within the business environment, and especially the correlation that exists between sustainability and profit.