Sovereign ESG and corporate investment: New insights from the United Kingdom

Dongna Zhang, Zuoxiang Zhao*, Chi Keung Lau

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)
10 Downloads (Pure)


This paper examines the nexus between sovereign environmental, social and corporate governance (ESG) issues and corporate investment decisions from a sustainable perspective. By utilising firm-level balance sheets data, country-level governance and policy uncertainty data, we find country governance has a significant positive effect on firm investment. Moreover, this paper shows that climate and migration policy uncertainty has a statistically and economically significant dampening impact on corporate investment, indicating that environmental and social prospect plays a key role in promoting business investment in the United Kingdom. In addition, the empirical evidence on the moderation analysis of corporate leverage suggests that superior environmental, social, and governance performance can help businesses relieve the burden of debt overhang on firm investment. These results provide several important implications on climate change with the objectives of the COP26 conference.
Original languageEnglish
Article number121899
Number of pages10
JournalTechnological Forecasting and Social Change
Early online date2 Aug 2022
Publication statusPublished - 1 Oct 2022


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