Climate Change Indicators and ESG Performance: Evidence from Non-Financial Firms Listed on the Egyptian Exchange (2013–2023)

Climate change has become one of the most pressing global challenges, reshaping corporate behavior, regulatory priorities, and sustainability frameworks worldwide. While Environmental, Social, and Governance (ESG) performance has emerged as a key evaluation metric for corporate sustainability, empirical research rarely examines how physical climate indicators influence ESG outcomes in emerging markets. This study investigates the impact of national CO₂ emissions and temperature anomalies on firm-level ESG performance among non-financial firms listed on the Egyptian Exchange from 2013 to 2023. ESG data were obtained from the London Stock Exchange Group (LSEG), while climate data were sourced from the World Bank and NOAA. Using both Fixed Effects estimation and the System Generalized Method of Moments (System GMM), the analysis accounts for unobserved heterogeneity, simultaneity, and the dynamic nature of sustainability outcomes. The findings show that CO₂ emissions exert significant negative effects on environmental and social scores, as well as the composite ESG index, while temperature anomalies significantly weaken governance performance. Profitability enhances ESG outcomes, whereas firm growth yields mixed effects across pillars. The results highlight the importance of integrating climate-risk considerations into sustainability policies, enhancing corporate climate resilience, and aligning disclosure frameworks with global reporting standards.