IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i12p5273-d1673971.html

A Tailored ESG Framework for Economic Growth in Saudi Arabia: ARDL Evidence from 1990 to 2022

Author

Listed:
  • Nagwa Amin Abdelkawy

    (Economics Department, School of Business Administration, King Faisal University, Al Hofuf 31982, Saudi Arabia)

  • Abdullah Sultan Al Shammre

    (Economics Department, School of Business Administration, King Faisal University, Al Hofuf 31982, Saudi Arabia)

Abstract

This study examines the impact of environmental, social, and governance (ESG) performance on economic growth in Saudi Arabia from 1990 to 2022. It uses a tailored ESG index and applies ordinary least squares (OLS) and autoregressive distributed lag (ARDL) models. The analysis reveals that while individual ESG components do not show significant short-term effects, the composite ESG index has a statistically significant positive effect on long-term GDP growth. These findings highlight the importance of integrated ESG strategies in enhancing economic resilience and diversification in resource-based economies. Moreover, although oil rents and trade openness continue to support short-term growth, they are associated with governance and environmental trade-offs, reflecting transitional challenges on the path to sustainability. Thie study provides new empirical evidence on the macroeconomic relevance of ESG in emerging economies and introduces a context-specific ESG index aligned with national policy goals. The results underscore the need to embed of embedding ESG frameworks into national development plans to ensure long-term economic resilience and structural transformation in line with Vision 2030.

Suggested Citation

  • Nagwa Amin Abdelkawy & Abdullah Sultan Al Shammre, 2025. "A Tailored ESG Framework for Economic Growth in Saudi Arabia: ARDL Evidence from 1990 to 2022," Sustainability, MDPI, vol. 17(12), pages 1-19, June.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:12:p:5273-:d:1673971
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/12/5273/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/12/5273/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nagwa Amin Abdelkawy, 2024. "Diversification and the Resource Curse: An Econometric Analysis of GCC Countries," Economies, MDPI, vol. 12(11), pages 1-29, October.
    2. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    3. Armand Kasztelan, 2017. "Green Growth, Green Economy and Sustainable Development: Terminological and Relational Discourse," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(4), pages 487-499.
    4. Abdullah Sultan Al Shammre, 2024. "The Impact of Using Renewable Energy Resources on Sustainable Development in the Kingdom of Saudi Arabia," Sustainability, MDPI, vol. 16(3), pages 1-16, February.
    5. Habib M. Alshuwaikhat & Ishak Mohammed, 2017. "Sustainability Matters in National Development Visions—Evidence from Saudi Arabia’s Vision for 2030," Sustainability, MDPI, vol. 9(3), pages 1-15, March.
    6. Ulrich Hoffmann, 2011. "Some Reflections On Climate Change, Green Growth Illusions And Development Space," UNCTAD Discussion Papers 205, United Nations Conference on Trade and Development.
    7. Montassar Kahia & Anis Omri & Bilel Jarraya, 2021. "Green Energy, Economic Growth and Environmental Quality Nexus in Saudi Arabia," Sustainability, MDPI, vol. 13(3), pages 1-13, January.
    8. Stephen Hammer & Lamia Kamal-Chaoui & Alexis Robert & Marissa Plouin, 2011. "Cities and Green Growth: A Conceptual Framework," OECD Regional Development Working Papers 2011/8, OECD Publishing.
    9. Cem Işık & Serdar Ongan & Hasibul Islam & Gul Jabeen & Stefania Pinzon, 2024. "Is economic growth in East Asia pacific and South Asia ESG factors based and aligned growth?," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(5), pages 4455-4468, October.
    10. Markard, Jochen & Raven, Rob & Truffer, Bernhard, 2012. "Sustainability transitions: An emerging field of research and its prospects," Research Policy, Elsevier, vol. 41(6), pages 955-967.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gaydaa Al-Zohbi & Maura A. E. Pilotti, 2023. "Contradictions about Sustainability: A Case Study of College Students from Saudi Arabia," Sustainability, MDPI, vol. 15(4), pages 1-15, February.
    2. Huang, Chongle & Hao, Simin & Ma, Limei, 2025. "The impact of ESG advantages on the economic development of neighboring regions," Energy Economics, Elsevier, vol. 145(C).
    3. Monk, Alexander & Perkins, Richard, 2020. "What explains the emergence and diffusion of green bonds?," Energy Policy, Elsevier, vol. 145(C).
    4. Marta Szczepańczyk & Paweł Nowodziński & Adam Sikorski, 2023. "ESG Strategy and Financial Aspects Using the Example of an Oil and Gas Midstream Company: The UNIMOT Group," Sustainability, MDPI, vol. 15(18), pages 1-24, September.
    5. Yugang He & Chunlei Wang, 2022. "Does Buddhist Tourism Successfully Result in Local Sustainable Development?," Sustainability, MDPI, vol. 14(6), pages 1-15, March.
    6. Choi, Gahyun & Park, Kwangyeol & Yi, Eojin & Ahn, Kwangwon, 2023. "Price fairness: Clean energy stocks and the overall market," Chaos, Solitons & Fractals, Elsevier, vol. 168(C).
    7. Jordi Molas-Gallart & Alejandra Boni & Sandro Giachi & Johan Schot, 2021. "A formative approach to the evaluation of Transformative Innovation Policies [The Need for Reflexive Evaluation Approaches in Development Cooperation]," Research Evaluation, Oxford University Press, vol. 30(4), pages 431-442.
    8. Mohamed Rashwan & Nardin Farouk & Rania Pasha, 2025. "Can ESG Strategies Drive Firm Value Growth in the MENA Region?," Sustainability, MDPI, vol. 17(17), pages 1-30, September.
    9. Francisco Gustavo Bautista Carrillo & Daniel Arias-Aranda, 2025. "Technological Adoption Sequences and Sustainable Innovation Performance: A Longitudinal Analysis of Optimal Pathways," Sustainability, MDPI, vol. 17(13), pages 1-24, June.
    10. María Belén Prados-Peña & Francisco Jesús Gálvez-Sánchez & Pedro Núñez-Cacho & Valentín Molina-Moreno, 2024. "Intention to purchase sustainable craft products: a moderated mediation analysis of the adoption of sustainability in the craft sector," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(1), pages 775-797, January.
    11. Mi Sook Lee, 2024. "The relationship between green innovation and sustainable growth in Korean companies: Moderated mediation effect of ESG score by industry," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2797-2810, June.
    12. Willem Schramade, 2016. "Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 95-111, April.
    13. van Weeren, Michelle & Bluntz, Clarence, 2025. "What makes a rating useable? Shifting epistemic practices in the ESG rating field," Accounting, Organizations and Society, Elsevier, vol. 114(C).
    14. Rami Salem & Musa Ghazwani & Waleed Alshaer, 2025. "ESG Performance–Stock Price Volatility Nexus: The Moderating Effect of Board Cultural Diversity in G20 Markets," Business Strategy and the Environment, Wiley Blackwell, vol. 34(7), pages 8172-8193, November.
    15. Florian Kiesel & Felix Lücke, 2019. "ESG in credit ratings and the impact on financial markets," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 28(3), pages 263-290, August.
    16. K. Thomas Liaw, 2020. "Survey of Green Bond Pricing and Investment Performance," JRFM, MDPI, vol. 13(9), pages 1-12, August.
    17. Zhang, Dongyang, 2023. "Does green finance really inhibit extreme hypocritical ESG risk? A greenwashing perspective exploration," Energy Economics, Elsevier, vol. 121(C).
    18. Al-Shaer, Habiba & Uyar, Ali & Kuzey, Cemil & Karaman, Abdullah S., 2023. "Do shareholders punish or reward excessive CSR engagement? Moderating effect of cash flow and firm growth," International Review of Financial Analysis, Elsevier, vol. 88(C).
    19. Ballester, Laura & González-Urteaga, Ana & Shen, Long, 2024. "Green bond issuance and credit risk: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 94(C).
    20. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Financial Stability Review, Banco de España, issue Autumn.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:17:y:2025:i:12:p:5273-:d:1673971. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.