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The ESG Emissions Paradox: Capability‐Contingent Effects of Research and Development and Cost Leadership in Asia

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  • Mirza Muhammad Naseer
  • Nazim Hussain
  • Sana Akbar Khan
  • Giuseppe Nicolò

Abstract

This study investigates the impact of greenhouse gas (GHG) emissions, research and development (R&D) spending, and cost leadership strategies (CLSs) on the environmental, social, and governance (ESG) performance of Asian firms from 2015 to 2023. Multiple econometric methods, including ordinary least squares (OLS), fixed effects, the generalized method of moments (GMM), and quantile regression, are employed to test the hypotheses. The study's findings indicate a positive association between GHG emissions intensity and ESG performance, suggesting that higher emitting firms tend to bolster their ESG ratings chiefly through enhanced transparency and governance practices rather than through emissions reductions. R&D intensity and CLS also demonstrate positive associations with ESG performance, with powerful effects among firms with initially lower capabilities. Quantile regression results indicate that these relationships vary across performance levels; top‐performing firms achieve a deeper level of sustainability integration, whereas lower performing firms rely more heavily on disclosure strategies. These results contribute to a deeper understanding of corporate sustainability in emerging markets and offer practical implications for policymakers, investors, and managers.

Suggested Citation

  • Mirza Muhammad Naseer & Nazim Hussain & Sana Akbar Khan & Giuseppe Nicolò, 2026. "The ESG Emissions Paradox: Capability‐Contingent Effects of Research and Development and Cost Leadership in Asia," Business Strategy and the Environment, Wiley Blackwell, vol. 35(2), pages 3077-3092, February.
    • Handle: RePEc:bla:bstrat:v:35:y:2026:i:2:p:3077-3092
    DOI: 10.1002/bse.70362
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