Estimating the causal impact of the Paris agreement on the ESG market: A Bayesian structural time-series approach

Naysary, Babak and Kamal, Javed Bin and Mirpoorian, Seyed Navid and Shrestha, Keshab (2025) Estimating the causal impact of the Paris agreement on the ESG market: A Bayesian structural time-series approach. Journal of Environmental Management, 395. p. 127829. ISSN 0301-4797

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Abstract

This study uses a Bayesian structural time-series model to examine the causal impact of the Paris Agreement on Environmental, Social, and Governance (ESG) markets across 18 countries. The research addresses key gaps in understanding the long-term effects of international climate agreements on sustainable finance. By analyzing MSCI ESG Leaders indices from 2013 to 2022, the study reveals significant variations in the agreement's impact across different economies. Countries like China and Indonesia experienced substantial increases in their ESG indices (31.01 %), while others like the UK saw decreases (−2.63 %). A structural break analysis serves as a robustness test, confirming significant shifts in ESG indices coinciding with the Paris Agreement's adoption in 2015. The study also highlights subsequent structural breaks in 2017, 2019, and 2021, reflecting ongoing regulatory changes and global events affecting ESG markets. This research contributes to a more nuanced understanding of how international climate policies shape sustainable investment practices, offering valuable insights for policymakers and investors navigating the evolving landscape of climate finance.

Item Type:	Article
Identification Number:	10.1016/j.jenvman.2025.127829
Dates:	Date Event 27 October 2025 Accepted 5 November 2025 Published Online
Uncontrolled Keywords:	Bayesian structural time-series, ESG, Paris agreement, Structural breaks
Subjects:	CAH17 - business and management > CAH17-01 - business and management > CAH17-01-07 - finance
Divisions:	Business School > Accountancy, Finance and Economics
Depositing User:	Gemma Tonks
Date Deposited:	16 Mar 2026 15:55
Last Modified:	16 Mar 2026 15:55
URI:	https://www.open-access.bcu.ac.uk/id/eprint/16928

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