ESG-based sustainability uncertainty and green growth in the US and UK: do human capital and technology matter?

This study investigates the impact of environmental, social, and governance (ESG) uncertainties, human capital development, and technological innovation on green growth in the USA and the United Kingdom. Employing advanced econometric techniques, this study applies Augmented Dickey-Fuller (ADF), Fourier ADF, Perron-Vogelsang, Bayer-Hanck cointegration, Maki cointegration, Fourier ARDL, Fourier NARDL, and Fourier Toda-Yamamoto causality tests to analyse data spanning from 2000 to 2022. The results indicate that ESG uncertainty negatively affects green growth, discourages sustainable investment, and policy stability. Human capital development significantly enhances green growth by fostering innovation and adaptation to sustainable technology. Technological innovation has a positive impact on sustainable development, also known as green growth. Still, it exhibits asymmetric effects across economies, with short-term benefits being more pronounced in the USA and stronger long-term impacts in the UK. This study finds robust cointegration among green growth, ESG uncertainties, human capital, and technological innovation, implying a long-term equilibrium relationship. Political stability and economic freedom further facilitate green growth, underscoring the importance of stable governance and market-oriented policies. This study develops an ESG-Based Sustainability Uncertainty Index (ESGUI) to fill a research gap by quantifying sustainability-related uncertainties. Unlike prior studies, which broadly discuss the economic determinants of green growth, this study systematically integrates uncertainty measures to provide a more comprehensive understanding. Additionally, it highlights the asymmetric role of technological innovation and human capital in mitigating sustainability risks. This study offers a more nuanced understanding of green growth dynamics by examining the interplay between technology, policy frameworks, and skills. Governments should enhance policy predictability to reduce sustainability-related uncertainty. Investment in human capital is crucial for fostering the adoption of green technology. Policymakers should prioritise stable institutional frameworks and market-friendly reforms to sustain green growth and ensure long-term economic and environmental resilience.