Does Operation Energy Cost Affect Financial Performance? The Moderating Role of SDG13 – Climate Action

This study seeks to analyze the influence of operational energy expenses on corporate financial performance, while exploring the moderating effect of Sustainable Development Goal 13 (SDG13: climate action) over the period of disruptions from 2021 to 2023.The research employs a sample of 63 publicly traded companies on the Egyptian stock exchange from diverse energy-intensive sectors. Operational energy cost is quantified as energy cost per sales, whilst financial performance is assessed using Return on Assets (ROA) and Return on Equity (ROE), utilizing a latent factor derived from principal component analysis (PCA). We utilize panel data models incorporating company and year fixed effects, along with clustered standard errors, while controlling for governance and carbon emissions. The findings indicate a substantial positive correlation between operational energy expenses and financial performance, highlighting pressure on operating margins, whereas SDG13 alleviates this impact via enhanced energy efficiency and less financing risk. The results remain consistent when: (1) employing the composite performance factor; and (2) redefining the independent variables to incorporate carbon emissions (scope 1+2) and governance as control variables, since the signs and directions of the impacts persist unchanged. This study advances theoretical and methodological frameworks by incorporating an accounting-climate perspective to examine moderation, elucidating the of outcomes in an emerging market context.