Abstract

This study documents a significant and positive impact of country-level environmental, social and governance (ESG) improvement on economic growth using an international sample of 109 countries through improving energy efficiency, promoting human-capital accumulation and attracting foreign investments. The economic benefits of country-level ESG improvement are robust after alleviating possible endogeneity concerns. Further analysis shows that the positive influence of country ESG performance on economic growth is most pronounced in high-income countries and for high-greenhouse gas emitters but weaker in countries whose national income relies on natural resources. Our findings provide policy implications for promoting sustainable economic growth.