ESG as a Catalyst for Economic Growth: Insights from Emerging Economies

Environmental, Social and Governance (ESG) principles constitute a vital framework for advancing sustainable development, particularly in emerging economies, where rapid economic growth frequently entails substantial social and environmental costs. This study investigates the influence of ESG criteria on economic growth across ten emerging economies (China, India, Brazil, South Africa, Turkey, Indonesia, Mexico, Morocco, Thailand, and Poland) over the period 2012-2022. Employing panel data regression methods, including the Fixed Effects Model (FEM) and the Generalized Method of Moments (GMM), the analysis examines the direct effects of ESG as well as the moderating roles of key economic factors, such as investment rates, inflation, trade openness, and population growth. The findings indicate a positive and statistically significant relationship between ESG and economic growth, encompassing each of the ESG dimensions. By offering empirical evidence from a heterogeneous set of emerging economies, this study contributes to the expanding literature on ESG, underscoring the necessity of aligning ESG initiatives with supportive economic conditions to foster sustainable and inclusive development.