Decarbonizing the Building Sector: The Integrated Role of ESG Indicators

This work tests the relationship of the building sector's carbon dioxide (CO₂) emissions with a set of environmental, social, and governance (ESG) indicators in an international panel of countries. Using machine learning approaches alongside traditional econometric techniques, the work identifies strong predictors of emissions intensity in the nature of scientific productivity, healthcare infrastructure, and good governance. The findings indicate higher scientific productivity and better government governance are associated with reduced CO₂ emissions from building stocks, while the effectiveness of government and R&D expenditures are found to be associated with higher emission rates, possibly due to the broader urban infrastructures of the developed nations. With the help of clustering as well as permutation-based measures of importance, the work establishes the complex dynamics interlinking development, knowledge creation, and environmental efficiency. The result provides practical indications for policymakers who aim to harmonize the national ESG policies with the targets of decarbonization in the built space. JEL Codes: Q56, O44, C55, H52, O38.