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The Impact of Esg (environmental, Social, Governance) Criteria on Foreign Direct Investments

Year: 2026

Type: article

Abstract: In the modern globalized economy, the determinants of Foreign Direct Investment (FDI) have shifted beyond traditional financial metrics and macroeconomic indicators. International institutional investors and multinational enterprises (MNEs) increasingly incorporate Environmental, Social, and Governance (ESG) criteria into their cross-border investment strategies. This study examines the structural mechanism through which country-level and firm-level ESG compliance influences inward FDI flows. The paper analyzes the individual contribution of the three ESG pillars, emphasizing that while strong governance ($G$) serves as a foundational prerequisite for risk mitigation, robust environmental ($E$) policies and social ($S$) capital significantly enhance long-term sustainability and operational stability. The findings demonstrate that high ESG standards lower systemic risk premiums, foster regulatory alignment, and create a sustainable environment for cross-border capital reallocation.

Source: Zenodo (CERN European Organization for Nuclear Research)

DOI: 10.5281/zenodo.24076995

Authors: Abdusalomova Barchinoy Jo'rabek qizi, Xudoyqulov Abdulla Eshquvvatovich

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W7225663459

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