Foreign Direct Investment and ESG Dimensions: A Panel Data Analysis for OECD Countries

This study analyzes the practical application of ESG criteria in the allocation of Foreign Direct Investment across OECD countries. Using a balanced panel of 950 observations covering the period 2000– 2024, we test whether ESG performance systematically attracts foreign investment and whether this relationship varies depending on the distribution of capital flows. Unlike existing literature, which predominantly uses mean-based models, this study makes a novel contribution by applying Quantile Regression, a method that allows for the identification of asymmetric effects of sustainability across the entire distribution of investments. Although the importance of ESG at the corporate level and within sustainable finance frameworks has increased significantly, empirical results show that the three ESG pillars influence investment flows differently. The Environmental Pillar exhibits the following pattern: high per capita CO₂ emissions have a positive impact on FDI, particularly in the upper quantiles, indicating that poor performance on environmental indicators does not deter investment in industrialized economies. In the case of the Social Pillar, high life expectancy affects FDI, reflecting the economic challenges of aging societies. In contrast, the Governance Pillar has a positive, robust, and amplifying effect: combating corruption is becoming increasingly important for attracting large-scale investment, serving as an institutional safeguard for capital protection.