Towards Sustainability Under Crude Dynamics: Exploring the Relation Between Oil Price and Sustainable Uncertainty

ABSTRACT Understanding the interrelations between oil price (OP) and environmental, social and governance (ESG)‐related uncertainty is critical in formulating effective strategies to advance sustainability goals. This study employs full‐sample and sub‐sample causal relation tests to investigate the complex relationship between OP and the ESG‐related uncertainty index (ESGUI). The empirical findings suggest that OP exerts both positive and negative influences on ESGUI, where the negative effects indicate that high OP may paradoxically reduce ESG‐related uncertainty, while low OP may increase it, thereby hindering sustainability efforts. However, sustained high OP levels elevate ESGUI by constraining clean energy financing and reviving carbon‐intensive investments, thereby creating a challenging environment for sustainability policies. Conversely, ESGUI boosts OP by delaying green investments and prolonging fossil fuel use, thus increasing oil demand and its price. Amidst ongoing energy and climate challenges, this study presents OP‐responsive policy recommendations for policymakers, corporate managers, investors and auditors, designed to mitigate ESG‐related uncertainties and effectively advance sustainability objectives.