Evaluating CSR – ESG Alignment for Sustainable Development Under Global Economic Uncertainty: Governance and Institutional Perspectives

Abstract

This study re‐examines the relationship between corporate social responsibility (CSR), environmental, social, and governance (ESG) indicators, and short‐run financial performance under heterogeneous institutional and uncertainty conditions. The analysis uses a balanced country–sector–year panel covering six countries and six sectors over 2015–2024 (360 observations), with 2025 retained as an extension. The empirical strategy distinguishes pooled CSR–ESG alignment from within‐panel co‐movement using fixed‐effects models, first‐difference models, observed‐only tests, and structural‐break analyses. CSR and ESG are positively associated in pooled comparisons, and this relationship becomes small and statistically insignificant once persistent country–sector heterogeneity and common year shocks are controlled. CSR, ESG, and their interaction do not exhibit a robust average association with return on equity (ROE) under the preferred specification. Regulatory Quality is positively associated with ROE, although neither institutional quality nor economic uncertainty significantly moderates the alignment–ROE association. The post‐2020 analysis reveals concentration in the ESG–ROE relationship, whereas no comparable shift is observed for CSR or the CSR–ESG interaction. The findings therefore support cross‐sectional alignment rather than stable within‐panel co‐movement or long‐run equilibrium and show that alignment does not automatically generate an immediate financial premium. Its value may instead arise through resilience, risk governance, stakeholder trust, and longer‐term organizational capacity that annual ROE does not fully capture. The study offers a practical diagnostic framework: policymakers and regulators can identify sector‐specific gaps in disclosure, verification, and implementation; firms can prioritize operational or measurement improvements; and investors, lenders, rating agencies, and data providers can strengthen due diligence and comparability.