Temporal Asymmetry in ESG Impact: Short- and Long-TermEffects on Economic Value Creation in the ColombianEnergySector

This working paper empirically examines the performance of the Environmental, Social, and Governance (ESG) pillars and their relationship with corporate value creation in the Colombian energy sector, contributing to the financial literature on the temporal asymmetry of sustainable investments. In the current context, companies operating in the extractive energy industry face increasing pressures arising from the energy transition, as well as the need to contribute to social development and environmental protection. Consequently, the adoption of ESG criteria has become a strategic imperative rather than merely a reputational choice.
However, the implementation of these practices entails substantial costs, requiring significant capital expenditures (CapEx), while their positive effects and financial benefits are not typically realized in the short term. Against this backdrop, the present study adopts a quantitative approach using a balanced panel data model comprising seven companies listed in the COLCAP index within the Colombian extractive energy sector over the period 2015–2024, resulting in a total of 56 effective observations.
The empirical analysis was conducted using a fixed-effects econometric model with cluster-robust standard errors, incorporating time lags for the environmental (t−2) and social (t−1) pillars to capture the delayed effects of sustainable investments. The results indicate that the coefficients associated with the three ESG pillars are negative and not statistically significant at conventional significance levels.
These findings suggest that, within the extractive energy industry, sustainability initiatives tend to tie up substantial amounts of capital without generating immediate financial returns, confirming that the payback period for such investments extends beyond two years. This evidence has important implications for strategic and financial decision-making, emphasizing the need for a long-term perspective when evaluating the economic outcomes of ESG investments.