Beyond sustainability: Empirical evidence from OECD countries on the connection among natural resources, ESG performances, and economic development

Abstract

Many have seen a remarkable increase in environmental, social, and governance (ESG) practices in the context of natural resource management. ESG is practically known to help achieve the Sustainable Development Goals (SDG) with more responsible management of natural resources. Yet, limited economic literature exists to illuminate how natural resource management can affect the quality of economic development. This paper attempts to develop and test a theoretical model to understand the interlinkage between natural resource rent, ESG performance, and the quality of economic development at the country level. This study employs a data set of OECD countries during the period of 2000-2017. The path analysis model is used to define the relationship between the measured variables. Our empirical study shows a negative association between ESG performance and natural resource rent; in other words, better human development inhibits corruption and promotes improved ESG performance. This study observes the presence of bidirectional Granger causality between natural resource rent and ESG performance. It is suggested that ESG performance is more likely to be affected by the quality of institutions, rather than by the economy size. Good institutions enable the economy to reach optimum resource allocation.

Board Characteristics, Social Trust and ESG Performance in the European Banking Sector

“…Banks located in countries with a high HDI seem to have a better ESG performance, which may be associated with the fact that in such countries, there is an obligation to integrate these factors into their business models, as well as the fact that there is a vast knowledge base and entrepreneurial acumen that leads banks to take these aspects into consideration in their decision-making processes (Ashraf et al 2022). Therefore, larger and more profitable banks based in countries with a high level of human development exhibit greater engagement with ESG issues and adopt socially responsible behaviors (Birindelli et al 2018;Chen and Wan 2020;Chen et al 2021;Naomi and Akbar 2021).…”

Eco-innovation influence on business performance in Jordanian micro, small and medium enterprises operating in the food processing sector

“…Some measures voluntary implemented by companies have clear evidence of their positive influence on competitiveness, such as utilization of social capital which is a key element of further firm development [ 74 ]. However, there is a need for constant environmental, social, and governance (ESG) practices supported both on entrepreneurial and country level [ 75 , 76 ].…”

The Role of GDP Growth in the Esg Approach at World Level

“…The positive relationship between GDP and ESG scores holds at global level (Morgenstern et al, 2022). ESG either Granger causes GDP either is Granger caused by GDP in OECD countries in the period 2000-2017 (Naomi & Akbar, 2021). For countries that have a medium-low level of GDP there is a positive impact of the adoption of ESG models in implementing the energy transition (Puttachai et al, 2022).…”