ESG Performance and GDP Per Capita : An Asymmetric Kernel Analysis

In this work, we test the sensitivity of gross domestic product per capita (GDP per capita) to changes in the environmental, social and governance (ESG) ratings of West African Monetary Union (WAMU) countries over the period 2005 to 2016. After structuring the ESG index, we explore the relative influence of ESG factors in the evolution of GDP per capita using the asymmetric kernel method. The results show that within the WAMU area, Senegal is the country with the highest ESG score. Furthermore, the estimates show a positive non-linear relationship between ESG rating and GDP per capita. Otherwise, a poor ESG rating, for example, is associated with a low level of GDP per capita, with a threshold level beyond which the ESG rating has no effect or even reduces the evolution of GDP per capita. The present analysis recommends a relaxation of the conditions for financing projects integrating ESG criteria until this threshold is reached