A Machine Learning and Panel Data Analysis of N 2 O Emissions in an ESG Framework

Carlo Drago (), Massimo Arnone and Angelo Leogrande ()
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Carlo Drago: Dipartimento di Scienze Economiche, Psicologiche, della Comunicazione, della Formazione e Motorie, Niccolò Cusano University, 00166 Rome, Italy
Massimo Arnone: Dipartimento di Economia e Impresa, University of Catania, 95124 Catania, Italy
Angelo Leogrande: Dipartimento di Management, Finanza e Tecnologia, LUM University Giuseppe Degennaro, 70010 Casamassima, Italy

Sustainability, 2025, vol. 17, issue 10, 1-56

Abstract: Addressing climate change requires a deeper understanding of all greenhouse gases, yet nitrous oxide (N 2 O)—despite its significant global warming potential—remains underrepresented in sustainability analysis and policy discourse. The paper examines N 2 O emissions from an environmental, social, and governance (ESG) standpoint with a combination of econometric and machine learning specifications to uncover global trends and policy implications. Results show the overwhelming effect of ESG factors on emissions, with intricate interdependencies between economic growth, resource productivity, and environmental policy. Econometric specifications identify forest degradation, energy intensity, and income inequality as the most significant determinants of N 2 O emissions, which are in need of policy attention. Machine learning enhances predictive power insofar as emission drivers and country-specific trends are identifiable. Through the integration of panel data techniques and state-of-the-art clustering algorithms, this paper generates a highly differentiated picture of emission trends, separating country groups by ESG performance. The findings of this study are that while developed nations have better energy efficiency and environmental governance, they remain significant contributors to N 2 O emissions due to intensive industry and agriculture. Meanwhile, developing economies with energy intensity have structural impediments to emission mitigation. The paper also identifies the contribution of regulatory quality in emission abatement in that the quality of governance is found to be linked with better environmental performance. ESG-based finance instruments, such as green bonds and impact investing, also promote sustainable economic transition. The findings have the further implications of additional arguments for mainstreaming sustainability in economic planning, developing ESG frameworks to underpin climate targets.

Keywords: nitrous oxide emissions; ESG models; econometric analysis; machine learning; sustainability policy (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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