Environmental, Social and Governance (ESG) Drivers of Sustainability Transitions in Sub‐Saharan Africa: Why One Size Does Not Fit All

Abstract

Despite growing emphasis on sustainability transitions in developing economies, evidence remains limited on how environmental, social and governance (ESG) conditions shape sustainability outcomes in sub‐Saharan Africa (SSA). This study examines the environmental, social and governance drivers of sustainability transition performance across 39 SSA countries over the period 2000–2023. A composite sustainability transition performance index (STPI), constructed from renewable energy consumption and reverse‐coded energy intensity indicators, is used to capture transition performance. A multi‐method panel framework is employed to examine direct, conditional, nonlinear and dynamic relationships. The findings show that environmental pressures, particularly carbon intensity and energy use, consistently weaken sustainability transition performance, whereas labour‐market conditions, particularly female employment and female wage employment, improve sustainability outcomes. Governance conditions operate primarily through regulatory quality, which significantly conditions the relationship between environmental pressures and sustainability transition performance. In addition, GDP per capita shapes the sustainability effects of environmental and labour‐market drivers across countries. Nonlinear estimates reveal an inverted U‐shaped relationship between energy use and sustainability transition performance, while dynamic estimates indicate strong persistence over time. The findings reveal substantial heterogeneity in sustainability pathways, suggesting that one‐size‐fits‐all sustainability policies may be less effective in SSA and underscoring the importance of context‐specific ESG strategies. The study contributes to sustainability‐transition research by demonstrating how interacting ESG drivers shape heterogeneous sustainability transitions in SSA.