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ESG Performances of Energy Companies in OECD Countries: A Clustering Approach

In: The ESG Framework and the Energy Industry

Author

Listed:
  • Cem Menten

    (Hacettepe University)

  • Bulent Cekic

    (Hacettepe University)

  • Kazim Baris Atici

    (Hacettepe University)

  • Selin Metin Camgoz

    (Hacettepe University)

  • Aydin Ulucan

    (Hacettepe University)

Abstract

Examining the Environmental, Social, and Governance (ESG) aspects of the organizations is one of the current concerns related to sustainable investment decisions. Energy markets are one of the key areas where ESG concepts are applied due to their dynamism, scale, and effect. Noting that the ESG framework is very appropriate for use of multi-criteria decision methodologies to rank the alternatives, the current research is motivated by the idea that clustering can also serve as a tool to evaluate ESG performance. Accordingly, we propose clustering as a tool for ESG analysis for OECD energy companies that enables us to identify the conflicting areas on ESG performance while avoiding potential controversies, the requirement for predefined information, or subjectivity in aggregation. The k-means clustering algorithm is used to analyze a data set of 231 energy organizations under the three ESG pillars of Environmental, Social, and Governance. We identify the patterns across the clusters that may signify high and low performance in each pillar and discuss the properties of prominent clusters in terms of business classifications and country of headquarters.

Suggested Citation

  • Cem Menten & Bulent Cekic & Kazim Baris Atici & Selin Metin Camgoz & Aydin Ulucan, 2024. "ESG Performances of Energy Companies in OECD Countries: A Clustering Approach," Springer Books, in: James Thewissen & Özgür Arslan-Ayaydin & Wim Westerman & André Dorsman (ed.), The ESG Framework and the Energy Industry, pages 87-111, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-48457-5_6
    DOI: 10.1007/978-3-031-48457-5_6
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    More about this item

    Keywords

    Energy planning; Sustainability; ESG; Clustering; OECD;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis

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