Work

Estimating the causal impact of the Paris agreement on the ESG market: A Bayesian structural time-series approach

Year: 2025

Type: article

Abstract: This study uses a Bayesian structural time-series model to examine the causal impact of the Paris Agreement on Environmental, Social, and Governance (ESG) markets across 18 countries. The research addresses key gaps in understanding the long-term effects of international climate agreements on sustainable finance. By analyzing MSCI ESG Leaders indices from 2013 to 2022, the study reveals significant variations in the agreement's impact across different economies. Countries like China and Indonesia experienced substantial increases in their ESG indices (31.01 %), while others like the UK saw decreases (-2.63 %). A structural break analysis serves as a robustness test, confirming significant shifts in ESG indices coinciding with the Paris Agreement's adoption in 2015. The study also highlights subsequent structural breaks in 2017, 2019, and 2021, reflecting ongoing regulatory changes and global events affecting ESG markets. This research contributes to a more nuanced understanding of how international climate policies shape sustainable investment practices, offering valuable insights for policymakers and investors navigating the evolving landscape of climate finance.

Source: Journal of Environmental Management

DOI: 10.1016/j.jenvman.2025.127829

Authors: Babak Naysary, Javed Bin Kamal, Seyed Navid Mirpoorian, Keshab Shrestha

Institutions: Birmingham City University, Monash University Malaysia, University of Sheffield, Sunway University

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,750