While Environmental, Social, and Governance (ESG) criteria are extensively utilized for corporate evaluation, empirical evidence regarding sovereign ESG efficiency remains scarce. Existing national sustainability indices often fail to account for how effectively a nation translates its economic resources into ESG outcomes. This study proposes a two-stage Data Envelopment Analysis (DEA) framework to evaluate the efficiency of 38 OECD countries in 2020. The national production process is decomposed into two sequential phases: (1) Economic Efficiency, transforming resource inputs (labor and energy) into intermediate economic outputs (GDP and trade openness), and (2) ESG Transformation Efficiency, converting those intermediate outputs into a composite ESG score. A novel quartile-based classification scheme is further applied to categorize countries into strategic groups for benchmarking. Empirical results reveal significant heterogeneity across the OECD. Estonia, Iceland, and Latvia emerge as “Win–Win” benchmarks, demonstrating high efficiency in both economic production and ESG transformation. Conversely, the United States is classified as a “Laissez-faire” member, exhibiting low performance in both stages relative to its capacity. Additionally, second-stage regression analysis indicates that while higher income is negatively associated with ESG transformation efficiency, government effectiveness acts as a significant positive driver. This research contributes a transparent, reproducible framework for sovereign ESG analytics that relates outcomes directly to economic capacity. It provides policymakers with an interpretable benchmarking tool to identify national sustainability gaps and facilitates actionable insights for enhancing public-sector effectiveness in achieving ESG goals.
Shih et al. (Thu,) studied this question.
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