Does national ESG performance move together with climate warming?

Achieving a balance between economic growth and climate change mitigation is essential for sustainable development. This research uses the panel data of 95 countries from 1990 to 2020, and conducts the Westerlund panel cointegration test to investigate the long-term bidirectional cointegration relationship between national environmental, social, and governance (ESG) performance and climate warming caused by carbon dioxide (CO2) and other greenhouse gas (GHG) emissions. This paper takes a deeper look at the short- and long-term causal relationships using panel dynamic ordinary least squares (DOLS) and vector error correction models (VECM). The results show that while the improvement of national ESG performance increases climate warming in the initial stage, it contributes to long-term mitigation in the future. In addition, the reduction of CO2 emissions per capita can significantly improve the mitigation in the long term, although the national ESG performance would decrease in the short term, the reduction of other GHG emissions can also improve the national ESG performance in both the short and long term. This research provides valuable insights for policy makers to improve national ESG performance, mitigate the climate crisis and promote sustainable development.