Saudi Arabia And The Global ESG Score Nexus: A Wavelet Coherence Perspective

Year 2025, Volume: 12 Issue: 2, 413 - 424, 13.08.2025

Mustafa Kevser , Samet Gürsoy , Yaşar Alptürk , Erdem Bulut

https://doi.org/10.26650/JEPR1653426

Abstract

This study presents a novel examination of the relations and interactions of environmental, social, and governance (ESG) scores among Saudi Arabia, the United States, Europe, Asia, and the Far East regions using a wavelet coherence approach. For this purpose, the study examined the causality between the ESG scores of Saudi Arabia and other countries. The analysis is rooted in the context of ESG, and sustainability employs a comprehensive monthly dataset calculated by MSCI from January 2016 to November 2023. Our findings reveal that the ESG score variables of Saudi Arabia and the world exhibit-positive and short-term co-movements during short-term economic cycles. However, the most significant relationship was observed to last from mid-2019 to 2021. Additionally, it was found that these relationships occurred under the leadership of various global regions in the 4-8 frequency range, while they were led by Saudi Arabia in the 0-4 frequency range. Furthermore, it can be stated that the related period was affected by the COVID-19 process. This is because the findings from the long-term frequencies that there is no relationship between Saudi Arabia and various global regions. According to the research results, long-term reforms and regulations are needed for full compliance with ESG practices. Although ESG improves financial performance in the short term, structural changes are required to achieve long-term economic growth. Accordingly, it is emphasized that ESG strategies should not only target short-term economic growth but also long-term sustainable development. These insights contribute to the current literature on ESG and offer practical implications for policymakers aiming to align sustainable financial performance and economic growth.

JEL Classification : C32 , F64 , Q56

Keywords

ESG , Sustainability , SDGs , Saudi Arabia , Wavelet Coherence Approach

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