Does ESG Improve Short-Term Efficiency? Evidence from Turkish Manufacturing Firms

This paper investigates whether Environmental, Social, and Governance (ESG) performance enhances firm-level efficiency in the short term, focusing on Turkish manufacturing firms. Using panel data from 16 firms listed on Borsa Istanbul over the period 2019-2023, the analysis employs fixed-effects models with robust estimators to account for heterogeneity and potential dependence structures. The findings indicate that ESG performance is not statistically significant in explaining operational efficiency, innovation, or firm growth in the short run. While the contemporaneous effect on production efficiency is weak and sensitive to estimation methods, the evidence for lagged ESG effects remains limited and sensitive to estimation methods. These results suggest that ESG does not generate robust short-term performance gains but may operate through longer-term and context-dependent mechanisms. Overall, the study highlights the importance of time horizon and methodological choices in evaluating ESG-performance relations.