The moderating effect of ESG between CO2 and greenhouse gas emissions and sovereign credit ratings levels in G20 countries

This paper examines the moderating role of environmental, social, and governance (ESG) performance in the relationship between CO2 and greenhouse gas emissions and sovereign credit ratings in G20 countries. Our findings indicate that higher ESG performance is associated with lower emission levels and improved creditworthiness, suggesting that sustainability practices help mitigate environmental risks while strengthening rating credibility. The study contributes to the literature by highlighting ESG as a key channel through which environmental performance influences sovereign risk assessments. Empirically, ESG performance emerges as a positive signal for investors, encouraging more responsible behavior. From a policy and managerial perspective, the results emphasize the strategic importance of integrating ESG considerations into national and institutional frameworks to enhance sustainability and financial credibility.