This working paper investigates whether the development and adoption of firm-level environmental, social and governance (ESG) practices affects national macroeconomic performance, and whether this differs between developed countries and emerging economies.
Using dynamic panel techniques - generalised method-of-moments (GMM) estimators - the paper finds that an increase of micro-ESG performance can result in the improvement of living standards as measured by GDP per capita.
When testing this link by country type, the paper finds that firm-level social performance in a country is positively associated with GDP per capita in both developed countries and emerging economies. As for the other two components of firm-level ESG measures, namely environmental and governance performance, the paper finds that these affect macroeconomic performance in emerging economies, but that the effects remain insignificant in developed countries. While further research is needed, these results may be of particular interest to policymakers and central banks, as they suggest that encouraging the adoption of ESG practices at the firm-level could support macroeconomic performance.
In order to enhance energy efficiency as a pillar of transition to a green energy economy it is important to understand whether and under which conditions energy efficiency programs could have positive economic and social impacts.
The ongoing review of the UK’s Fourth Carbon Budget is closely linked to the debate over the impact that domestic climate change policies can have on the competitiveness of businesses.