Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Impact of Environmental, Social, and Governance on the Profitability of National Oil Companies: A Case Study of Nigerian National Petroleum Company Limited

Gbolahan Solomon Osho

Abstract

This study examines the impact of Environmental, Social, and Governance factors on the profitability of the Nigerian National Petroleum Company Limited (NNPC Limited) following its transition into a commercially oriented entity under the Petroleum Industry Act. Using a mixed- methods approach, the study integrates longitudinal ESG and financial data with qualitative insights from key stakeholders. The findings suggest that improvements in governance, environmental management, and social engagement are positively correlated with stronger economic performance, as measured by return on assets, return on equity, net margins, and operational efficiency. Governance reforms exhibit the most decisive influence, underscoring the centrality of transparency, accountability, and audit quality in shaping financial outcomes. Environmental and social initiatives also contribute by reducing operational disruptions, mitigating risk, and strengthening community relations. The results highlight ESG integration as a strategic pathway to enhance competitiveness, attract sustainable financing, and position NNPC Limited in line with global expectations for the energy transition. Recommendations emphasize deepening governance reforms, strengthening environmental controls, and aligning CSR with long-term community development.

Keywords

ESG performanceprofitabilityNNPC Limitedgovernance reformsustainability reportingenergy transitionmixed-methods research.

References

Adams, M., Osho, G., & Coleman, Q. (2008). The politics and political implications of oil and gas exploration in Africa: An analysis of American oil corporations in Nigeria. International Business & Economics Research Journal , 7(12). Aggarwal, R., & Williamson, R. (2016). Governance mechanisms and firm value: The impact of ownership and board structure. Journal of Corporate Finance, 37(1), 1–22. https://doi.org/10.1016/j.jcorpfin.2015.12.006 Barney, J. B. (2001). Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view. Journal of Management, 27(6), 643–650. https://doi.org/10.1177/014920630102700602 Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in Psychology, 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa Brooks, C., & Oikonomou, I. (2018). The effects of ESG practices on financial performance: A review of the literature. The Financial Review, 53(1), 1–24. https://doi.org/10.1111/fire.12187 Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. (2011). Does it really pay to be green? Determinants and consequences of proactive environmental strategies. Journal of Accounting and Public Policy, 30(2), 122–144. https://doi.org/10.1016/j.jaccpubpol.2010.09.013 Creswell, J. W., & Plano Clark, V. L. (2018). Designing and conducting mixed methods research (3rd ed.). SAGE Publications. Dieli, O. J., Kato, M., Osho, G. S., & Cleveland, S. (2019). Modeling the Cost of Technology Transfer and Economic Growth in Nigeria. International Journal of Regional Development, 6(2), 1–1. Dieli, O. J., Opara, E. U., Osho, G. S., & Erhuanga, G. A. (2020). The Marginal Impact And Spillover Effects Of Increased Expenditure On Cyber Security In Us It Industry And Gdp Growth Rates. Journal of Smart Economic Growth, 5(2), 125–140. Eccles, R. G., & Klimenko, S. (2019). The Investor Revolution: Shareholders Are Getting Serious About Sustainability. Harvard Business Review, 97(3), 106–116. Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B., & de Colle, S. (2010). Stakeholder theory: The state of the art. Cambridge University Press. Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917 Gatimbu, K. K., & Wabwire, J. M. (2016). Effect of corporate environmental disclosure on the financial performance of firms listed at the Nairobi Securities Exchange. International Journal of Sustainability Management and Information Technologies, 2(1), 1–6. Hetherington, O., & Osho, G. S. (2026). Black energy in Texas: Energy transition and labor market equity—Integrating workforce development into state energy policy. Journal of Public Administration and Social Welfare Research, 11(3), 58–75. North, D. C. (1990). Institutions, Institutional Change, and Economic Performance. Cambridge University Press. Nwankwo, O., & Osho, G. S. (2010). An empirical analysis of corporate survival and growth: Evidence from efficient working capital management. International journal of scholarly academic intellectual diversity, 12(1), 1–13. Nunes, S. T., Osho, G. S., & Nealy, C. (2004). The impact of human interaction on the development of virtual teams. Journal of Business & Economics Research , 2(12). OCHONOGOR, K., OSHO, G., & ANOKA, C. (2024). SUPPLY CHAIN DISRUPTIONS AND FIRM PERFORMANCE: PROFFERING FEASIBLE AND SUSTAINABLE SOLUTIONS TO MITIGATING FUTURISTIC DISRUPTIONS IN THE COVID-19 PANDEMIC ERA. THE INTERNATIONAL JOURNAL OF ENGINEERING AND SCIENCE Учредители: The IJES Publication, 13(11), 10-12. Ochonogor, K. N., Osho, G. S., Anoka, C. O., & Dieli, O. J. (2022). The impact of supplier base consolidation on procurement, delivery, and production costs: Supply chain operations optimization and vendor consolidation. International Research in Economics and Finance, 6(4), 10. Ojumu, O., & Osho, G. O. (2026). Oil and gas exports, macroeconomic stability, and labor productivity in Nigeria: Long-run and short-run evidence from an ARDL bounds testing approach. Journal of Applied Business and Economics, 28(2), 226–246. Ojumu, O., Osho, G. S., & Tandon, S. (2025). Economic Diversification and Bilateral Trade Agreements in the United Arab Emirates: A Gravity Model Analysis. Journal of Applied Business & Economics, 27(2). Ojumu, O., Osho, G. S., & Amadi, V. (2026). Assessing the impact of monetary policy on economic growth: An empirical study of money supply and economic expansion in Nigeria. International Journal of Economics and Finance, 18(4). Ojumu, O., & Osho, G. S. (2023). The Effect of Global Oil and Gas Prices and Production Fluctuations on the Economy of Nigeria. Journal of Applied Business & Economics, 25(7). Opara, E. U., Dieli, O. J., Osho, G. S., Stiff, C., & Gordon, K. (2026). Generative artificial intelligence as a catalyst for enterprise transformation: Evidence from revenue growth, productivity, and industry disruption. International Journal of Artificial Intelligence (AI) in Business and Management Research, 3(1), 1–22. Osho, G. S. (2026). Organizational structures and strategic performance in petroleum exploration and production (E&P) companies: A meta-analytic assessment. International Journal of Management and Organizational Research, 5(2), 195–205. Osho, G., Osagie, J., & Adams, M. O. (2005). Risk Management In Developing Countries: Evidence From Multinational And Country Financial Risk Analysis. Journal of Business & Economics Research , 3(8). Osho, G. S., Ojumu, O., Tandon, S., & Oloyede, B. (2026). Monte Carlo–based forecasting and optimization of oil price and production: Evidence from Nigeria’s petroleum sector. Journal of Applied Business and Economics, 28(1), 105–123. Osho, G. S. (2026). Returns on carbon, methane reductions, and energy transition in the global oil and gas market. International Journal of Technical & Scientific Research Engineering, 9(1), 1–19. Osho, G. S. (2026). Developing a sustainable framework on the energy transition and its effects on alternative new funding realities for national oil companies. The International Journal of Engineering and Science, 15(1), 8–20. Osho, G. S., Ochonogor, K. N., & Ojumu, M. (2024). Impact of Supply Chain Management in the Construction Industry for Effective Project Delivery. International Journal of Advances in Engineering and Management, 6(10), 602–609. Osho, G. S. (2026). Hydropower, Climate Change, and the Green Energy Transition in Nigeria: Assessing Economic and Policy Pathways Toward a Low-Carbon Future. International Journal of Advances in Engineering and Management, 8(1), 288–300. Osho, G. S. (2025). Exploring trade volume dynamics in Sub-Saharan Africa through structural Gravity Theory modeling of international trade: A dynamic econometric analysis. Applied Business and Economics Journal, 3(1), 24–48. Osho, G. S. (2025). The geopolitical dynamics of oil and gas: Nigeria’s strategic role, emerging challenges, economic policies, and opportunities. Journal of Energy Technologies and Policy, 15(1), 121–136. Osho, G. S. (2025). Oil Subsidy and Nigeria’s Economic Growth: A Blessing or a Burden? International Journal of Economics and Finance, 17(10). Osho, G. S., & Oloyede, B. (2024). A Generalized Autoregressive Conditional Heteroscedasticity GARCH for Forecasting and Modeling Crude Oil Price Volatility. The Journal of Applied Business and Economics, 26(6), 39–53. Osho, G. S. (2025). Optimizing joint ventures and alternative funding for Nigeria's oil and gas industry: Improved financing and transitioning to commercial ventures. International Journal of Professional Business Review: Int. J. Prof. Bus. Rev., 10(2), 10. Osho, G. S. (2025). Navigating Cash Call and Revenue Challenges in Nigeria’s Oil and Gas Sector: Strategic Implications, Economic Impacts, and Policy Lessons. Journal of Economics & Management Research, (6)287, 2–8. Osho, G., Oloyede, B., Adetosoye, A., Fernandes, M., & Samuel, R. (2005). DRILLING AN OFFSHORE WELL WITHIN THE ECONOMIC BUDGET CONSTRAINTS. Southwest Review of International Business Research. 6(1), 213–220. Osho, G. S. (2025). The Effect of Cash Call on Decommissioning of Floating Production Storage and Offloading in Nigeria's Oil and Gas Industry. International Journal of Advances in Engineering and Management, 7(4), 857–872. Osho, G. S. (2023). Application of autoregressive integrated moving average for modeling and forecasting of crude oil production. Journal of Energy Technologies and Policy, 13(1), 36– 47. Osho, G., Nazemzadeh, A., Osagie, J., & Williford, R. (2005). Increased demand for oil in developing countries: Effects on the global oil trade. Southwest Rev. Int. Bus. Res, 15, 221– 231. Osho, G. S. (2019). A General Framework for Time Series Forecasting Model Using Autoregressive Integrated Moving Average-ARIMA and Transfer Functions. Int J Stat Probab, 8(6), 1–23. Osho, G. S. (2005). Effect of overtime on productivity and quality in manufacturing plants. Business Research Yearbook, 12(2), 804–808. Osho, G., Nazemzadeh, N., & Loera, N. (2005). An analysis of the impact of offshore outsourcing of jobs on the U.S. economy: Economic projection. Southwest Review of International Business Research, 16(1). Owolabi, S. A., & Ajayi, O. O. (2020). Corporate social responsibility and community conflict reduction in oil-producing regions: Evidence from Nigeria. Journal of African Business, 21(3), 345–367. https://doi.org/10.1080/15228916.2020.1713559 Palinkas, L. A., Horwitz, S. M., Green, C. A., Wisdom, J. P., Duan, N., & Hoagwood, K. (2015). Purposeful sampling for qualitative data collection and analysis in mixed-method implementation research. Administration and Policy in Mental Health and Mental Health Services Research, 42(5), 533–544. https://doi.org/10.1007/s10488-013-0528-y Schramade, W. (2016). ESG integration: Our way forward. Journal of Applied Corporate Finance, 28(2), 38–47. https://doi.org/10.1111/jacf.12145 Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review, 20(3), 571–610. https://doi.org/10.2307/258788 Uwakonye, M. N., Osho, G. S., & Anucha, H. (2006). The impact of oil and gas production on the Nigerian economy: A rural sector econometric model. International Business & Economics Research Journal , 5(2). Victor, N. M., Gerarden, T., & Rai, V. (2012). National oil companies and value creation: An economic analysis. Energy Policy, 48, 60–66. https://doi.org/10.1016/j.enpol.2012.06.055 Yin, R. K. (2018). Case study research and applications: Design and methods (6th ed.). SAGE Publications.

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT

Bridging Legal, Financial, and Data Governance in Enterprise AI: Emerging Trends

Author: Funmilayo Ashore-Onisemo, Ebehiremen Faith Iziduh, Uchechi Mary-Linda Unamma, Ifeanyichukwu Jeffrey Okwesa

Macroeconomic Policies and Economic Stability in Nigeria

Author: Abel-Tariah Emmanuel Onate, Okon, Ekanem Nsikhe, Nwenyi Francis Onwe

Determinants of Bank Liquidity in Nigeria

Author: Nelson Johnny Ebifemo-ere Stephen