Leveraging Financial and Technological Drivers in Advancing <scp>ESG</scp> Sustainability Practices in Achieving Sustainable Development Goals

ABSTRACT Climate change has amplified global attention on environmental, social, and governance (ESG) practices as key drivers to achieve the United Nations' sustainable development goals (SDGs). ESG integration plays a crucial role in advancing SDGs such as decent work and economic growth (Goal 8), Reduced inequalities (Goal 10), industry, innovation, and infrastructure (Goal 9), and affordable and clean energy (Goal 7). These practices can enhance financial access, market development, economic growth, labor productivity, and digital inclusion, yet sustainability in ESG norms and assessment continues to pose significant challenges. This study explores the determinants of ESG sustainability in Japan, an advanced economy where institutional, financial, and technological dynamics significantly influence sustainability transitions. Using the Quantile‐on‐Quantile Kernel Regularized Least Squares (QQKRLS) method, the analysis investigates the asymmetric and nonlinear effects of financial institutions, financial development, financial market access, ICT infrastructure (internet and fixed telephone services), labor participation, stock market activity, and economic growth on ESG sustainability. The results highlight that these factors exert heterogeneous effects across quantiles: strong financial development, enhanced ICT infrastructure, increased labor participation, and robust economic growth generally reduce ESG sustainability, while weak institutional capacity, limited financial market access, and insufficient stock market activity amplify it. Policy options are highlighted in the study.