How Trade Policy Uncertainty Affects ESG Investment Flows: Time-Series Analysis Using IMF and Sustainalytics Data

Najmi Kamariah; Abdul Rahman Kadir; Nuraeni Sayuti; Nur Rezky Amaliah

doi:10.2991/978-94-6239-709-5_150

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How Trade Policy Uncertainty Affects ESG Investment Flows: Time-Series Analysis Using IMF and Sustainalytics Data

Authors

Najmi Kamariah¹^{, *}, Abdul Rahman Kadir¹, Nuraeni Sayuti¹, Nur Rezky Amaliah¹

¹Hasanuddin University, Makassar, Indonesia

^*Corresponding author. Email: najmikamariah@gmail.com

Corresponding Author

Najmi Kamariah

Available Online 20 June 2026.

DOI: 10.2991/978-94-6239-709-5_150 How to use a DOI?
Keywords: Track Policy Uncertainty; Structural Exposure; Trade Integration; Asymmetric Repair; ESG
Abstract: This study investigates the impact of trade policy uncertainty (TPU) on Environmental, Social, and Governance (ESG) investment flows using a dynamic panel data model and monthly data from 15 major economies between 2010 and 2023. Drawing on Real Options Theory and Institutional Theory, we hypothesize that rising TPU negatively affects ESG investments, particularly in trade-integrated markets and trade-sensitive sectors. We further posit an asymmetric investor response, with rapid outflows during uncertainty spikes but slow recovery. Employing System GMM estimation and IMF’s TPU index, we find robust evidence that a one-standard-deviation increase in TPU reduces monthly ESG fund inflows by USD 1.42 billion. This effect is stronger in economies with higher trade openness and funds exposed to trade-dependent ESG sectors. Moreover, analysis of positive and negative TPU changes reveals a significant hysteresis effect, indicating that ESG investors respond swiftly to uncertainty shocks but cautiously to subsequent stabilization. These findings underscore the vulnerability of sustainable finance to trade policy shocks and highlight the need for policy coordination to build resilient ESG investment frameworks.
Copyright: © 2026 The Author(s)
Open Access: Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title: Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025)
Series: Advances in Economics, Business and Management Research
Publication Date: 20 June 2026
ISBN: 978-94-6239-709-5
ISSN: 2352-5428
DOI: 10.2991/978-94-6239-709-5_150 How to use a DOI?
Open Access: Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

ris enw bib

TY  - CONF
AU  - Najmi Kamariah
AU  - Abdul Rahman Kadir
AU  - Nuraeni Sayuti
AU  - Nur Rezky Amaliah
PY  - 2026
DA  - 2026/06/20
TI  - How Trade Policy Uncertainty Affects ESG Investment Flows: Time-Series Analysis Using IMF and Sustainalytics Data
BT  - Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025)
PB  - Atlantis Press
SP  - 2155
EP  - 2169
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-709-5_150
DO  - 10.2991/978-94-6239-709-5_150
ID  - Kamariah2026
ER  -

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