<![CDATA[The relationship between ESG performance and financial distress remains underexplored in developing Asia?Pacific energy markets, particularly regarding the contextual factors that may strengthen or weaken this link.This study examines the direct effect of ESG on financial distress and investigates the moderating roles of leverage and firm size.Using a sample of 88 energy companies from 12 developing Asia?Pacific economies over 2019–2024, panel data from LSEG are analysed with fixed effects regression. Financial distress is measured by Altman’s Z”?Score, ESG by the Refinitiv ESG Combined Score (lagged one year), leverage by debt?to?assets ratio, and firm size by natural log of total assets.ESG performance has a positive and significant direct effect on Z”?Score, indicating reduced financial distress. Leverage negatively moderates this relationship (ESG×Leverage: ? = –0.0451, p 0.01), meaning that high debt weakens the protective effect of ESG. Firm size positively moderates the relationship (ESG×Size: ? = 0.0204, p 0.05); larger firms benefit more from ESG in lowering distress risk.ESG reduces financial distress, but the effect is conditional on capital structure and scale. Managers should integrate ESG with deleveraging strategies, especially for smaller firms. Investors and policymakers in developing Asia?Pacific countries should consider these moderators when evaluating ESG?related risk and designing sustainability incentives.]]>
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