Geopolitical risk dislodging ESG agenda: Evidence from BRICS and advanced economies

This paper examines whether geopolitical risk influences the ESG agenda across major advanced and BRICS economies. It estimates the impact of geopolitical risk on ESG risk, explores differences between BRICS and advanced economies, and tests the persistence of this impact after controlling for climate exposure. We used geopolitical risk, ESG risk, fiscal resilience, ecosystem resilience, climate exposure, and real GDP per capita of 26 sample countries that account for a majority of the world’s GDP, collected from BMI of Fitch solutions during 2015 to 2025. While using the Two-way Fixed Effect with Driscoll–Kraay standard error method, the study provides macro-level evidence that geopolitical instability is a first-order driver of sustainability risk, with effects that differ systematically between BRICS and advanced economies. The marginal effects confirm substantial heterogeneity in the transmission of geopolitical risk to ESG risk across economies, though the risk is high in emerging economies, but the magnitude of transmission differs within the advanced economies, indicating that advanced economies are not shockproof.