Abstract This study examines the association between macro-level climate conditions and firm-level Environmental, Social, and Governance (ESG) performance in Egypt over the period 2018–2023. While prior research on ESG and climate risk has predominantly focused on firm-level environmental indicators and developed economies, this study adopts a macro-level climate perspective within a climate-vulnerable frontier market. Using an unbalanced panel of 48 non-financial firms listed on the Egyptian Exchange and employing firm fixed-effects and dynamic System GMM estimators, the analysis investigates how national carbon dioxide (CO₂) emissions per capita and temperature anomalies are associated with ESG outcomes. The empirical findings indicate that higher national CO₂ emissions per capita are negatively associated with firms’ overall ESG performance, with particularly strong associations observed for the environmental and social pillars. Temperature anomalies exhibit a weaker but statistically significant negative association with governance performance, while their associations with environmental and social dimensions remain limited. Firm size and profitability are positively associated with ESG performance, suggesting that organizational capacity and financial resilience are important in shaping sustainability disclosure and governance practices. These results contribute to the growing literature on climate risk and corporate sustainability by demonstrating that ESG outcomes in emerging markets reflect not only firm-specific characteristics but also shared macro-level climate pressures embedded within the institutional environment. Importantly, the estimated relationships should be interpreted as associative rather than causal, reflecting how national climate pressures align with firms’ ESG disclosure and governance responses within a common institutional environment. The findings offer policy-relevant insights for regulators, investors, and corporate managers seeking to strengthen ESG governance and climate-related disclosure in emerging economies, consistent with Egypt Vision 2030 and global sustainability objectives. Graphical Abstract
Wahba et al. (2026) studied this question.