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Unlocking the threshold effects of ESG performance towards policy energy efficiency of the European energy sector: A hybrid multi-criteria decision-making approach based on weight-entropy TOPSIS

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  • Zournatzidou, Georgia
  • Staikouras, Christos
  • Ragazou, Konstantina
  • Zopounidis, Constantin
  • Sariannidis, Nikolaos

Abstract

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.

Suggested Citation

  • Zournatzidou, Georgia & Staikouras, Christos & Ragazou, Konstantina & Zopounidis, Constantin & Sariannidis, Nikolaos, 2025. "Unlocking the threshold effects of ESG performance towards policy energy efficiency of the European energy sector: A hybrid multi-criteria decision-making approach based on weight-entropy TOPSIS," Energy Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:eneeco:v:151:y:2025:i:c:s014098832500742x
    DOI: 10.1016/j.eneco.2025.108915
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    JEL classification:

    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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