Cement, a critical material in construction, is known for its energy-intensive production process, which substantially contributes to industrial emissions. In response to the growing global emphasis on sustainability, this study explores the association between environmental, social and governance (ESG) dimensions and corporate performance within the global cement industry. It specifically examines the moderating role of national economic development in shaping this relationship. While ESG adoption is widespread among corporations and nations, its impact on firm performance may vary depending on the economic contexts in which firms operate.
The study utilizes a balanced panel dataset of 770 firm-year observations from cement companies across multiple countries for the period 2013–2023. It employs panel regression models along with the system generalized method of moments (GMM) to ensure robustness and address potential endogeneity issues.
Grounded in the institutional difference hypothesis (IDH) and market orientation theory, the findings reveal that firms operating in more economically developed countries are better equipped to transform ESG initiatives, especially environmental and social dimensions, into superior corporate performance. The results also highlight a distinction between the short-term and long-term effects of ESG disclosures on financial outcomes.
This study offers actionable insights for managers, policymakers and investors by showing that the success of ESG initiatives is context-dependent. It emphasizes the need for customized sustainability strategies aligned with a country’s level of economic development.
The paper uniquely integrates economic context and temporal dynamics to examine ESG impacts in the high-emission cement sector, providing novel contributions to sustainability and performance literature.
