Environmental, social and governance (ESG) performance of firms in the era of geopolitical conflicts

Mohammed Saharti, Sajid M. Chaudhry*, Viktor Pekar, Elnaz Bajoori

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Do geopolitical conflicts matter for the environmental, social, governance (ESG) and overall ESG performance of firms? We answer this question by studying the impact of geopolitical conflict of a country on the ESG performance, separately and collectively, of firms of that country. We use data from Refinitiv and UCDP/PRIO (Uppsala Conflict Data Program/International Peace Research Institute, Oslo) databases for the period from 2002 to 2021 for 79 countries and we use fixed effects regression as our main methodology. We find that if a country is in a geopolitical conflict, their firms are impacted in the form of lower E, S and G performance and overall ESG performance, with stronger effects for developed countries. This comes on top of the direct costs of geopolitical conflicts. Our results are robust to country, year and firm fixed effects as well as robust to endogeneity as we use Lewbel (2012) estimator to eliminate any chances of endogeneity. We provide first evidence on this topic and it has geopolitical and socioeconomical implications.
Original languageEnglish
Article number119744
JournalJournal of Environmental Management
Early online date7 Dec 2023
Publication statusPublished - Feb 2024

Bibliographical note

Copyright © 2023, Elsevier. This accepted manuscript version is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International https://creativecommons.org/licenses/by-nc-nd/4.0/


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