Does Environmental, Social, and Governance Risk Impede Economic Growth?

Abstract

This article aims to explore the connection between Environmental, Social, and Governance related risks and economic growth. For this purpose, I performed two panel-data regression Models by utilizing the Gross domestic product as a dependent variable and ESG scores and degree of ESG-related risk exposures as independent variables in presence of five control variables. The ESG scores and degree of ESG-related risks exposures were collected from the Risk Indexes for the sample period 2019 to 2021. This research found that the country’s high ESG-related risk exposures negatively influence GDP. This study provides policymakers with important implications of the country’s ESG-related risk exposures in the best interests of the world’s stakeholders including Foreign institutional investors (FIIs).