Sustainability Practices and Financial Performance: Evidence from BIST Electricity Index

Amidst the backdrop of heightened market risks associated with transitioning to a lower-carbon economy, this study pioneers an examination of the correlation between sustainability and financial performance within Turkish energy market generator and retailer companies. In this study, the sustainability performance, exposure to market risks and effects on the financial performance of sub-sectors of companies listed in the BIST Electricity index were analyzed using panel data regression. The findings reveal a nuanced relationship between sustainability factors and financial performance, underscoring the imperative for electricity sector companies to prioritize sustainability initiatives not only for ethical reasons but also as a strategic imperative for long-term financial success and stakeholder value creation. Finally, the possibility of impending regulatory changes underscores the importance of early adoption of sustainability practices to mitigate potential financial liabilities and navigate future market risks effectively.