ESG and Macroeconomic Interactions: Mechanisms, Pathways, and Future Directions---A Literature Review and Outlook

Abstract

Environmental, Social, and Governance (ESG) principles have evolved from micro-level corporate practices to macroeconomic governance frameworks, becoming key variables influencing growth models, resource allocation efficiency, and welfare distribution. This paper systematically reviews two decades of international literature on ESG-macroeconomy interactions, analyzing bidirectional mechanisms through which ESG affects economic growth, inflation, employment structures, and balance of payments via pathways such as green innovation, human capital accumulation, and institutional quality optimization. Concurrently, it examines how macroeconomic cycles, policy frameworks, and globalization shape ESG practices. Findings reveal limitations in analyzing heterogeneous pathways, modeling dynamic feedback mechanisms, and understanding interactions under extreme shocks. Future research should integrate complex systems theory with big data methods to construct multidimensional dynamic frameworks, enhance cross-country comparisons and policy evaluations, and provide theoretical support for global sustainable development goals.