Green financial regulation and shale gas resources management

Managing shale gas resources can cause environmental, safety, and other sustainability issues. The Environment, Society, and Governance (ESG) report is seen as an important way to promote responsible natural resources management through green finance regulation. The China Petrochemical Corporation (Sinopec Group) published the first ESG report of the Chinese mainland in 2014 to highlight sustainable issues. Assessing the financial impact of this significant ESG report on shale gas companies is of interest to researchers and practitioners. This study used both the event study and bootstrap regression to analyze the impact of the ESG report on the market performance of shale-gas-related companies. The results demonstrate the heterogeneity of the impact of the ESG report on the management of shale gas resources by relevant listed companies. The report provided short-term positive returns to its issuer and potential associates. The stock returns of private companies and smaller companies are significantly negatively affected by the ESG announcement. Companies listed in Shenzhen suffer greater losses in shares after the ESG announcement than those listed in Shanghai. The ESG announcement heterogeneously affects the stock return of companies engaged in shale gas exploration, production, sale, transmission, and integrated business. The results of this paper are informative for regulating shale gas resources management through financial measures.

Automated summary

Managing shale gas resources can lead to various sustainability issues, which can be addressed through the use of Environment, Society, and Governance (ESG) reports to promote responsible natural resources management. The study examines the financial impact of the first ESG report in China on shale gas companies and finds that the report has heterogeneous effects on the market performance of relevant listed companies. The results suggest that the ESG report provides short-term positive returns to its issuer and potential associates, but negatively affects private and smaller companies.