Differential Impacts of ESG Investing on Emissions: A Comparative Time-Series Analysis of the US and India (2000–2023)

International Journal of Economics and Management Studies

© 2025 by SSRG - IJEMS Journal

Volume 12 Issue 7

Year of Publication : 2025

Authors : Shravan Harish

10.14445/23939125/IJEMS-V12I7P104

How to Cite?

Shravan Harish, "Differential Impacts of ESG Investing on Emissions: A Comparative Time-Series Analysis of the US and India (2000–2023)," SSRG International Journal of Economics and Management Studies, vol. 12,  no. 7, pp. 25-35, 2025. Crossref, https://doi.org/10.14445/23939125/IJEMS-V12I7P104

Abstract:

Environmental, Social, and Governance (ESG) investing has emerged as a popular strategy to align financial decisions with sustainability goals in the face of climate change and rising emissions. However, the actual effectiveness of ESG investing in reducing greenhouse gas emissions remains debated. This study examines the relationship between ESG-related factors and emissions in two distinct economies—the United States, a developed country, and India, an emerging one—over the period 2000–2023. Using time-series data and the Autoregressive Distributed Lag (ARDL) model, the research explores both short- and long-term effects of renewable energy investment, healthcare spending, and governance quality on emissions. In the US, results suggest that healthcare spending contributes modestly to emission reductions over time, while economic growth increases emissions. Interestingly, stronger governance in the short term is associated with rising emissions, possibly due to growth-oriented policies or initial costs of cleaner technologies. In India, renewable energy investment increases emissions in the short term, likely due to infrastructure development. However, healthcare spending, manufacturing output, foreign investment, and trade are associated with short-term emissions reductions, reflecting efficiency and technology use gains. Over the long term, trade and governance correlate with rising emissions, while manufacturing continues to mitigate them. The findings highlight that ESG outcomes are shaped by a country’s development context, infrastructure maturity, and policy frameworks. While ESG factors can promote emission reductions, their overall effectiveness is contingent upon targeted, well-implemented strategies. The study underscores the need for context-specific ESG policies to ensure meaningful progress toward climate goals.

Keywords:

ESG Investment, Greenhouse Gas Emissions, ARDL, Renewable Energy.

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