Sustainable Development and Foreign Direct Investment: An Environmental, Social and Governance Perspective Based on the Sustainable Development Goal

This study examines the relationship between environmental, social, and governance (ESG) performance and foreign direct investment (FDI) inflows across countries, with particular attention to the individual ESG pillars. The analysis covers 189 countries over 2011–2025, using period averages to construct a cross-sectional dataset. ESG performance is derived from Sustainable Development Goal indicators and analyzed both as an aggregate index and through its environmental, social, and governance pillars. Descriptive statistics, Pearson correlation analysis, and ordinary least squares regression with macroeconomic controls are employed. The aggregate ESG index is not significantly associated with FDI inflows. Governance is negatively and significantly associated with FDI, while the environmental pillar is positive but insignificant in the main model and becomes significant after excluding two influential observations. The social pillar remains insignificant. Overall, the results indicate substantial heterogeneity across ESG dimensions.