Determinants of Renewable Energy Investment: An Integrated Analysis of ESG, Geopolitical Risk, and Finance

The global transition to renewable energy (RE) requires substantial investment amidst complex interactions between Environmental, Social, and Governance (ESG) factors and Geopolitical Risk (GPR). This study investigates these dynamics across 44 countries from 2008-2023 using an integrated panel dataset combining IRENA investment data, World Bank ESG indicators, and the GPR index. Panel data regression models (Pooled OLS, Random Effects, Fixed Effects) with robust clustered standard errors were estimated after addressing multicollinearity via VIF reduction and performing appropriate model selection tests. The Fixed Effects (Entity) model was preferred based on a significant Hausman test (p=0.0000). Results indicated that within-country changes in GPR were not significantly associated with annual RE investment changes (p=0.43). Specific social equity metrics (income share of lowest 20%, Gini index) showed significant associations with investment shifts, while changes in selected governance and environmental indicators did not. Investment composition by technology (e.g., wind, solar, hydro) and financing type (specifically grants, p=0.005) were significant predictors. The findings suggest foundational stability and social equity considerations are critical alongside targeted financial mechanisms for accelerating RE investment, while short-term GPR volatility showed limited direct impact within countries during this period.