Assessing the impact of renewable energy firms on ESG-related uncertainty: Evidence from Germany's low-carbon...

In light of the growing importance of sustainable finance and renewable energy markets, this study examines how fluctuations in Germany's renewable energy sector interact with sustainability-related uncertainty. Using the wavelet quantile-on-quantile regression approach (WQQR), it investigates the influence of renewable energy sector prices, including solar energy, wind energy, and renewable fuels, on the ESG-Related Uncertainty Index (ESGUI-G) in Germany over the period from June 2008 to 2025. In the short term, we found a negative effect of S92G, ECVG, VBKG, and NDXG on ESGUI-G, and no effect was observed by CE2G and PNE. In the medium term, ESGUI-G was positively affected by CE2G, ECVG, PNE, and VBKG, and negatively affected by NDXG and S92G. In the long term, the results indicate that ESGUI-G is positively (negatively) affected by CE2G (NDXG, S92G, and VBKG). Furthermore, we observed a mix of positive and negative effects of ECVG and PNE on ESGUI-G in different quantiles. The results indicate that wind power equity is highly correlated with sustainability uncertainty, amplifying risk under both normal and turbulent market conditions. In contrast, green fuels and bioenergy firms exhibit short-term stability at low quantiles, followed by consistently positive effects in the medium and long term at higher quantiles, suggesting their potential as effective hedging tools under normal conditions, though they may exacerbate uncertainty in extreme circumstances.