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Global and regional transmission of ESG policy uncertainty: Evidence from developed and emerging markets

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  • Nyakurukwa, Kingstone
  • Seetharam, Yudhvir
  • Chipeta, Chimwemwe

Abstract

This study examines the global transmission of environmental, social, and governance policy uncertainty (ESGUI), focusing on how such uncertainty spreads across countries, regions, and structural groupings such as developed and emerging markets. Using a time-varying parameter vector autoregression model, the analysis reveals a high degree of global connectedness, with ESGUI being strongly transmitted across borders rather than remaining localised. At the country level, France and Colombia emerge as key net transmitters of ESGUI, while the UK, US, Japan, and Brazil are more often net receivers. Regionally, Europe and North America act as major sources of spillovers, whereas Asia remains a persistent net recipient. Structurally, emerging markets have shifted over time from being net receivers to net transmitters, especially after 2012, reflecting their growing influence in the global ESG landscape. These findings demonstrate the increasing globalisation of ESG policy risk and highlight the need for coordinated regulatory responses and improved risk mitigation strategies across jurisdictions. The study contributes to the literature by offering new insights into the dynamic and structural dimensions of ESG uncertainty transmission

Suggested Citation

  • Nyakurukwa, Kingstone & Seetharam, Yudhvir & Chipeta, Chimwemwe, 2025. "Global and regional transmission of ESG policy uncertainty: Evidence from developed and emerging markets," Finance Research Letters, Elsevier, vol. 86(PA).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pa:s1544612325016095
    DOI: 10.1016/j.frl.2025.108355
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    1. Feyyaz Zeren & Mesut Dogan & Serkan Eryilmaz, 2026. "Determinants of ESG‐Related Sustainability Uncertainty: Asymmetric Fourier Evidence From G7 Countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 33(1), pages 1479-1492, January.

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