IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i17p7997-d1742624.html

ESG Performance in the EU and ASEAN: The Roles of Institutional Governance, Economic Structure, and Global Integration

Author

Listed:
  • Alina Elena Ionașcu

    (Department of Finance and Accounting, Faculty of Economic Sciences, Ovidius University of Constanta, 900001 Constanta, Romania)

  • Dereje Fedasa Hordofa

    (Department of Economics, College of Business and Economics, Dire Dawa University, Dire Dawa P.O. Box 1362, Ethiopia)

  • Alexandra Dănilă

    (Department of Finance and Accounting, Faculty of Economic Sciences, Ovidius University of Constanta, 900001 Constanta, Romania)

  • Elena Cerasela Spătariu

    (Department of Economics, Faculty of Economic Sciences, Ovidius University of Constanta, 900001 Constanta, Romania)

  • Andreea Larisa Burcă (Olteanu)

    (Accounting Doctoral School, Bucharest University of Economic Studies, 010374 Bucharest, Romania)

  • Maria Gabriela Horga

    (UNESCO Department, The Faculty of Business Administration in Foreign Languages (FABIZ), Bucharest University of Economic Studies, 010374 Bucharest, Romania)

Abstract

This study investigates how Environmental, Social, and Governance (ESG) performance is shaped across 31 countries in the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) from 1990 to 2020. To explore these relationships, we employed the Continuously Updated Generalized Method of Moments (CUE-GMM) and the Limited Information Maximum Likelihood (LIML), with additional robustness checks using Instrumental Variables Two-Stage Least Squares (IV-2SLS), Panel-Corrected Standard Errors (PCSE), and Driscoll-Kraay regressions. The results highlight democratic governance as a consistent driver of ESG advancement. Military expenditure can also support sustainability by reinforcing institutional stability, particularly in developing and upper-middle-income countries. Economic factors such as foreign direct investment, industrialization, and human capital show context-dependent effects, whereas globalization and natural resource rents generally enhance ESG performance, and inflation tends to constrain it. Overall, the findings underscore the importance of tailored, context-specific sustainability policies, showing that effective ESG progress depends on the interaction between institutions, economic structures, and global integration.

Suggested Citation

  • Alina Elena Ionașcu & Dereje Fedasa Hordofa & Alexandra Dănilă & Elena Cerasela Spătariu & Andreea Larisa Burcă (Olteanu) & Maria Gabriela Horga, 2025. "ESG Performance in the EU and ASEAN: The Roles of Institutional Governance, Economic Structure, and Global Integration," Sustainability, MDPI, vol. 17(17), pages 1-29, September.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:17:p:7997-:d:1742624
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/17/7997/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/17/7997/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lei Ruan & Heng Liu, 2021. "Environmental, Social, Governance Activities and Firm Performance: Evidence from China," Sustainability, MDPI, vol. 13(2), pages 1-16, January.
    2. Niu, Bingcheng, 2024. "Government environmental protection expenditure and national ESG performance: Global evidence," Innovation and Green Development, Elsevier, vol. 3(2).
    3. Binder, Michael & Hsiao, Cheng & Pesaran, M. Hashem, 2005. "Estimation And Inference In Short Panel Vector Autoregressions With Unit Roots And Cointegration," Econometric Theory, Cambridge University Press, vol. 21(4), pages 795-837, August.
    4. Rabindra Nepal & Han Phoumin & Abiral Khatri, 2021. "Green Technological Development and Deployment in the Association of Southeast Asian Economies (ASEAN)—At Crossroads or Roundabout?," Sustainability, MDPI, vol. 13(2), pages 1-19, January.
    5. Ko, Jeremy & Leung, Chun Kai & Dodoo, Albert Nii & Agbajor, Favour David, 2025. "Regional disparities and trends in national ESG performance across africa: A comparative analysis (1990–2020)," Innovation and Green Development, Elsevier, vol. 4(3).
    6. Alexandra Danila & Maria-Gabriela Horga & Oana Oprisan & Tanase Stamule, 2022. "Good Practices on ESG Reporting in the Context of the European Green Deal," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 847-847, August.
    7. Niranjan Chipalkatti & Quan Vu Le & Meenakshi Rishi, 2021. "Sustainability and Society: Do Environmental, Social, and Governance Factors Matter for Foreign Direct Investment?," Energies, MDPI, vol. 14(19), pages 1-18, September.
    8. Bertrand Kian Hassani & Yacoub Bahini, 2022. "Relationships between ESG Disclosure and Economic Growth: A Critical Review," JRFM, MDPI, vol. 15(11), pages 1-23, November.
    9. Joakim Westerlund, 2005. "New Simple Tests for Panel Cointegration," Econometric Reviews, Taylor & Francis Journals, vol. 24(3), pages 297-316.
    10. Ko, Jeremy & Leung, Chun Kai, 2025. "Gender Inequality and ESG performance: A global analysis of governance, environmental, and social outcomes in 97 countries," Innovation and Green Development, Elsevier, vol. 4(4).
    11. Ramesh Chandra Das & Imran Hussain, 2023. "Relationships between Military Spending and Green Capital Formation: Complementary or Substitutes?," Social Sciences, MDPI, vol. 12(10), pages 1-17, October.
    12. Daron Acemoglu & Simon Johnson & James A. Robinson, 2012. "The Colonial Origins of Comparative Development: An Empirical Investigation: Reply," American Economic Review, American Economic Association, vol. 102(6), pages 3077-3110, October.
    13. Alan Bueno & Ben Hur Francisco Cardoso & Dominik Hartmann & Diogo Ferraz, 2024. "Does small firm dynamics matter for occupation diversity and job quality? Evidence from Brazil," Journal of Innovation and Entrepreneurship, Springer, vol. 13(1), pages 1-26, December.
    14. Shinwari, Riazullah & Wang, Yangjie & Gozgor, Giray & Mousavi, Mahdi, 2024. "Does FDI affect energy consumption in the belt and road initiative economies? The role of green technologies," Energy Economics, Elsevier, vol. 132(C).
    15. Qi Gong & Jiahui Gu & Zhaoyang Kong & Siyan Shen & Xiucheng Dong & Yang Li & Chade Li, 2025. "The Impact of ESG Ratings on Corporate Sustainability: Evidence from Chinese Listed Firms," Sustainability, MDPI, vol. 17(13), pages 1-25, June.
    16. 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.
    17. Muhammad Qasim, 2024. "A weighted average limited information maximum likelihood estimator," Statistical Papers, Springer, vol. 65(5), pages 2641-2666, July.
    18. Liu, Xue-Ying & Zhao, Xin-Xin & Ma, Kun & Sharma, Susan Sunila, 2024. "The impact of financial sanctions on ESG performance of target countries," Pacific-Basin Finance Journal, Elsevier, vol. 87(C).
    19. Francesco Crespi & Claudia Ghisetti & Francesco Quatraro, 2015. "Environmental and innovation policies for the evolution of green technologies: a survey and a test," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 343-370, December.
    20. Marc-Arthur Diaye & Sy-Hoa Ho & Rim Oueghlissi, 2022. "ESG performance and economic growth: a panel co-integration analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(1), pages 99-122, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:bcp:journl:v:9:y:2025:i:10:p:3717-3730 is not listed 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. Ma, Yan & Yin, Zhu-Jia & Fu, Qiang, 2025. "A national Blue-ESG index: measurement of marine sustainability," Innovation and Green Development, Elsevier, vol. 4(4).
    2. Soto, Gonzalo Hernández, 2024. "The effects of foreign direct investment on environmentally related technologies in Latin America," Resources Policy, Elsevier, vol. 90(C).
    3. Skare, Marinko & Gavurova, Beata & Sinkovic, Dean, 2025. "Measuring artificial intelligence's impact on sustainable energy transition: Empirical insights and policy implications," Energy Economics, Elsevier, vol. 150(C).
    4. Chen, Pei-Fen & Chen, Mei-Ping, 2025. "Do country sustainability practices matter to happiness?," Economic Modelling, Elsevier, vol. 152(C).
    5. Kemal Cek & Demet Beton Kalmaz, 2025. "Innovation, governance, inclusion: ESG pillars powering economic growth," Journal of Innovation and Entrepreneurship, Springer, vol. 14(1), pages 1-20, December.
    6. Taner Güney & Ersin Nail Sağdıç, 2025. "Government Effectiveness, Solar Energy, and CO2 Emissions in OECD Countries: A Panel Quantile Regression Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(3), pages 11836-11855, September.
    7. Cheng Hsiao, 2016. "Panel Macroeconometric Modeling," Working Papers 2016-02-21, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    8. Herzer, Dierk, 2025. "The impact of government-funded renewable energy R&D on its consumption," Journal of Policy Modeling, Elsevier, vol. 47(5), pages 903-918.
    9. Bartosz Jóźwik & Aviral Kumar Tiwari & Antonina Viktoria Gavryshkiv & Kinga Galewska & Bahar Taş, 2024. "Energy–Growth Nexus in European Union Countries During the Green Transition," Sustainability, MDPI, vol. 16(24), pages 1-19, December.
    10. Richard G. Anderson & Hailong Qian & Robert H. Rasche, 2006. "Analysis of panel vector error correction models using maximum likelihood, the bootstrap, and canonical-correlation estimators," Working Papers 2006-050, Federal Reserve Bank of St. Louis.
    11. Wen, Jun & Yin, Hua-Tang & Chang, Chun-Ping & Tang, Kai, 2024. "How AI shapes greener futures: Comparative insights from equity vs debt investment responses in renewable energy," Energy Economics, Elsevier, vol. 136(C).
    12. Muhammad Anas & Wei Zhang & Talal H. Alsabhan & Liaqat Ali & Jie Han, 2025. "Advancing energy-related climate mitigation technologies in arctic region: the impact of green finance and critical mineral resources," Climatic Change, Springer, vol. 178(10), pages 1-28, October.
    13. Arturas Juodis, 2013. "Cointegration Testing in Panel VAR Models Under Partial Identification and Spatial Dependence," UvA-Econometrics Working Papers 13-08, Universiteit van Amsterdam, Dept. of Econometrics.
    14. Neil A. Wilmot & Ariuna Taivan, 2021. "Examining the Impact of Financial Development on Energy Production in Emerging Economies," JRFM, MDPI, vol. 14(2), pages 1-17, February.
    15. Chen, Mo & Xue, Wei-Xian & Zhao, Xin-Xin & Chang, Chun-Ping & Liu, Xiaoxia, 2024. "The impact of economic sanctions on the COVID-19 pandemic," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 163-174.
    16. Zhang, Haoran & Yu, Xiaohong & Gao, Zixuan, 2025. "Is the end of AI in photovoltaic power? Evidence from China," Energy Economics, Elsevier, vol. 145(C).
    17. Otto Brøns-Petersen & Søren Havn Gjedsted, 2021. "Climate change and institutional change: what is the relative importance for economic performance?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(2), pages 333-360, April.
    18. Hosan, Shahadat & Rahman, Md Matiar & Karmaker, Shamal Chandra & Saha, Bidyut Baran, 2023. "Energy subsidies and energy technology innovation: Policies for polygeneration systems diffusion," Energy, Elsevier, vol. 267(C).
    19. Mohammad Mafizur Rahman & Nahid Sultana, 2024. "Nexus of Human Development and Environmental Quality in Low-Income and Developing Countries: Do Renewable Energy and Good Governance Matter?," Sustainability, MDPI, vol. 16(13), pages 1-18, June.
    20. Chakraborty, Adrij, 2017. "Colonial Origins and Comparative Development: Institutions Matter," MPRA Paper 86320, University Library of Munich, Germany, revised Feb 2018.

    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:17:p:7997-:d:1742624. 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.