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

Alina Elena Ionașcu (), Dereje Fedasa Hordofa (), Alexandra Dănilă, Elena Cerasela Spătariu, Andreea Larisa Burcă (Olteanu) and Maria Gabriela Horga
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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

Sustainability, 2025, vol. 17, issue 17, 1-29

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.

Keywords: ESG performance; institutional governance; economic structure; global integration; dynamic panel data; Continuously Updated Generalized Method of Moments (CUE-GMM) (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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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:17:y:2025:i:17:p:7997-:d:1742624

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