Does ESG Performance Influence Economic Growth? The Role of Financial Reporting Environment and IFRS Adoption in Türkiye and Selected Turkic Economies

This study examines the impact of Environmental, Social, and Governance (ESG) performance on economic growth in Türkiye and selected Turkic economies, with particular emphasis on the financial reporting environment and IFRS adoption. Despite growing interest in the macroeconomic implications of sustainability, empirical evidence from emerging and transition economies remains limited, particularly regarding how financial reporting and institutional environments shape the ESG–growth nexus. Using annual panel data for 2000–2024, the study investigates the effect of ESG performance on GDP growth while controlling for key macroeconomic and financial variables. Regulatory quality is employed as a proxy for the institutional environment supporting financial reporting quality, whereas IFRS adoption captures countries’ alignment with internationally recognized financial reporting standards. Given the presence of cross-sectional dependence, the analysis employs the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) estimator. The results indicate that ESG performance has a positive and statistically significant effect on economic growth. Although IFRS adoption and regulatory quality exhibit positive coefficients, neither is statistically significant. Overall, the findings highlight the importance of ESG performance for long-run economic growth while suggesting that stronger financial reporting and institutional environments may provide supportive conditions for sustainable economic development.