Economic Structure, Policy Credibility, and Technology in Shaping ESG Uncertainty: Evidence from G7 Economies

Despite global commitment to sustainability, environmental, social, and governance (ESG) uncertainty remains a persistent challenge, particularly in advanced economies. The existing literature often treats ESG uncertainty as an exogenous shock, overlooking its endogenous links with policy design, technological change, and institutional structures. This study addresses this gap by conceptualizing ESG uncertainty as an endogenous outcome and examining its determinants and heterogeneous effects across G7 economies using annual panel data from 2002 to 2019. Employing Pooled Mean Group, panel quantile ARDL (PQARDL), and Juodis, Karavias, and Sarafidis (JKS) Granger noncausality tests, we assessed the roles of environmental policy stringency, technological innovation (TiN), economic globalization, political stability (PS), and service sector expansion. The results show that TiN and service sector expansion consistently reduce ESG uncertainty, whereas environmental policy stringency paradoxically increases long-run uncertainty. Economic globalization stabilizes ESG uncertainty primarily in economies with strong institutional capacity, whereas PS exhibits regime-dependent effects. JKS tests confirm that these relationships are directional rather than purely correlational. Overall, the findings demonstrate that ESG uncertainty is shaped by structural policy choices, highlighting the need for predictable regulations, robust innovation systems, calibrated openness, disciplined governance reforms, and sustained structural transformation to support a stable sustainability environment.