ESG disclosure and form performance under transition risk: Evidence from Malaysia’s energy sector

Noraini Moktar, Mazzlida Mat Deli, Tahmina Akhter, Siti Norliyana Harun

Abstract


This study investigates how environmental, social and governance (ESG) disclosure influences firm performance in Malaysia’s energy sector, emphasizing the moderating role of transition risk. Using panel data from 2012–2022 for seven publicly listed energy firms, three performance measures: Tobin’s Q, Return on Assets (ROA) and Sharpe Ratio were analyzed. Results indicate that ESG disclosure quality significantly enhances firm valuation and profitability, though environmental disclosure negatively affects risk-adjusted returns in the short term. Transition risk moderates the ESG–performance relationship, highlighting firms’ capacity to manage policy and technological uncertainties during energy transition. The findings contribute to emerging-market literature by integrating transition risk into the ESG–performance nexus. Policy implications include aligning ESG reporting with Bursa Malaysia and IFRS/ISSB standards, improving investor screening for green finance and encouraging firms to enhance transparent communication strategies to attract sustainable capital.

 

Keywords: Energy sector, ESG, Malaysian stock’s market, transition risk


Keywords


Energy sector, ESG, Malaysian stock’s market, transition risk

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