Abstract:

The sustainability-linked discussion has gained international importance in the recent years, as the concept of ESG seems to be on everyone’s lips nowadays. Debates at the highest levels are, however, still ongoing as to whether sustainability matters should be treated as a priority or little to no added economic value is added by transitioning to a green economy. What is without doubt in this equation is the position of the public sector, as the north star that will guide and drive the global economies towards a sustainable future or not. This paper aims at shedding some light over this very topical subject by presenting the link between ESG-related government efforts and economic development. Based on an extensive set of econometric techniques, the results indicate mixed impacts of various ESG-related forms of public spending and revenue on economic growth. The results can provide public policy advice as to how authorities should make use of their available resources to promote sustainability while retaining wealth creation.