Reassessing Environmental Performance Within ESG Frameworks: Efficiency-Based Evidence From Multinational Firms

The paper explores the evolving relationship between decarbonization strategies, environmental performance within ESG frameworks, and the economic performance of multinational companies in the context of increasing environmental and geopolitical uncertainty. Since the early 2000s, there has been a growing convergence towards greener and more sustainable business models, including the sectors of finance and banking. However, the recent technological transformation and geopolitical tensions pose challenges to the green transition, affecting its economic feasibility and environmental effectiveness. We adopt a risk-management perspective and argue that aggregate ESG scores may obscure the financial implications of environmental behaviour. Using a multi-stage modelling approach - combining a preliminary dynamic framework with principal component analysis and efficiency benchmarking (DEA) - we test whether improvements in environmental performance translate into improved revenue growth in 16 multinational firms (2015–2023). Results show that even cost-free emissions reductions do not guarantee better economic outcomes, challenging the assumption that E[SG] improvements are necessarily growth-enhancing. Across differential-equations modelling, PCA regressions, DEA benchmarking, and simulated ‘cost-free’ environmental improvements (up to 20%), we do not find evidence that environmental improvements per se raise revenue growth.