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Country-level political risk and ESG performance: International evidence

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  • Kong, Wei

Abstract

Based on panel data from 59 countries (or regions) worldwide spanning the period from 1990 to 2020, this study empirically examines the impact of national political risk on sovereign ESG performance. We find that an increase in a country’s political risk significantly reduces its ESG performance, and this effect remains significant over a five-year period. Specifically, higher levels of political risk are significantly linked to declines in environmental sustainability (E), social equity (S), and governance quality (G) across countries. Moreover, political risk hinders ESG performance by undermining government efficiency. Finally, this paper finds strong evidence that ESG performance is significantly affected in high- and upper-middle-income countries, low-population countries, as well as in democratic nations. In contrast, political risk appears to have no meaningful influence on ESG outcomes in low- and lower-middle-income, non-democratic, or high-population countries.

Suggested Citation

  • Kong, Wei, 2026. "Country-level political risk and ESG performance: International evidence," Economic Analysis and Policy, Elsevier, vol. 90(C), pages 1105-1114.
    • Handle: RePEc:eee:ecanpo:v:90:y:2026:i:c:p:1105-1114
    DOI: 10.1016/j.eap.2026.02.010
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