ESG Performance in Emerging Economies

Business sustainability has been assessed by combining the financial (governance) and non-financial (environmental and social) performance of companies. This assessment must consider the institutional characteristics of the countries. Brazil, Russia, India, China, and South Africa (BRICS) are emerging economies, i.e., in economic and social transition. The aim of this study is to identify the factors that affect ESG performance and each of its pillars of companies located in these emerging markets. This objective was developed by means of panel data regression with fixed effects controlled by year and economic sector, over the period 2016 to 2022, obtaining 6,278 observations of companies located in the BRICS. The main results show that a country’s higher level of transparency (absence of corruption) increases performance in the environmental and social dimensions; while the Index of Economic Freedom is associated with the governance dimension; in the characteristics at the company level, voluntary adherence to the Global Compact stands out, and large companies show better ESG performance compared to medium and small companies. These results have empirical implications at the country level (policies and legislation) and at the company level (headquarters country and size differences). The main contribution indicates that different factors affect the ESG performance of BRICS countries and of companies located in these countries. This contribution fills a gap in the literature and empirical evidence on ESG in companies from emerging markets.