ECON-ESG dynamics and energy poverty: a path to sustainable development in South Asia

This study introduces the novel concept of ECON-ESG to investigate, for the first time, the impact of economic, environmental, social, and governance factors on energy poverty in South Asian countries during 2000–2021. Using advanced econometric techniques—including Pooled Mean Group (PMG)/Autoregressive Distributed Lag (ARDL) models, Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Granger causality tests—the study examines both long-term and short-term dynamics. The results reveal significant long-term relationships between energy poverty and individual ESG dimensions. Environmental improvements reduce energy poverty over the long term but present short-term challenges due to high transition costs. Social investments, especially in education, healthcare, and gender equity, are crucial for alleviating energy poverty, fostering inclusive development, and enhancing access to energy. Governance, characterized by transparency, accountability, and efficient policy implementation, ensures equitable energy distribution. The composite ECON-ESG factor highlights both opportunities and challenges, emphasizing the complexity of integrating ESG strategies with economic realities. Bidirectional causality tests further indicate interdependence between energy poverty and ESG factors, with governance, social, and environmental dimensions showing significant causal effects. The findings underscore the importance of context-specific, adaptive frameworks in South Asia, harmonizing ESG objectives with economic growth. Policymakers are encouraged to adopt balanced strategies addressing short-term trade-offs and long-term sustainability, ultimately promoting social equity, reducing energy poverty, and advancing the region’s sustainable development goals (SDGs).