Bridging Sustainability and Inclusion: Financial Access in the Environmental, Social, and Governance Landscape

Bridging Sustainability and Inclusion: Financial Access in the Environmental, Social, and Governance Landscape | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Bridging Sustainability and Inclusion: Financial Access in the Environmental, Social, and Governance Landscape Carlo Drago, Alberto Costantiello, Massimo Arnone, Angelo Leogrande This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6733648/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper explores the correlation between financial inclusion and the Environment, Social, and Governance (ESG) aspects of sustainable development for a big panel of 103 developing nations over 12 years. Financial inclusion as a measure is taken through the Account Age variable capturing adults having access to formal financial institutions as a percentage. The analysis revolves around the three main ESG pillars each through panel data regressions complemented by instrumental variable (IV) approaches in addressing endogeneity concerns. In the Environment (E) dimension, we find conventional agricultural forms (e.g., extensive agricultural land areas and agriculture value added) as having a negative effect on financial inclusion, but the environmental modernization proxies—renewable energy utilization, food production, climate resilience, and areas under protection—exhibit positive and significant correlations. In the Social (S) dimension, development indicator variables like spending on education, internet penetration, life years at birth, sanitation, and gender equity emerge as strong predictors of higher financial inclusion, and labor market participation is found to have a negative effect, possibly due to the dynamics of employment in the informal sector. The Governance (G) analysis shows positive correlation with controlling corruption and innovation production (applications for patents) as arguments for increased financial access improving institutional transparency and economic ingenuity and a negative correlation with regulatory quality as a concern for capacity gaps in rapidly digitizing economies. Through the means of ESG-matched environmental instruments, this paper presents a unique cross-dimensional approach to sustainable finance and shows through counterfactual analysis under both average and counterfactual distributions that policies supporting financial inclusion can be a path to multiple benefits on the environmental sustainability, social equity, and governance effectiveness axes—key requirements for the success of the Sustainable Development Goals (SDGs) in the Global South. JEL CODE: G21, O16, Q56, I38, H55, O44, C33. Finance Other Economics Environmental Economics Financial Inclusion ESG Framework Developing Countries Instrumental Variables Sustainable Development Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6733648","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":461019066,"identity":"31c9777e-14ea-40b1-bb55-5513842ca18c","order_by":0,"name":"Carlo Drago","email":"","orcid":"","institution":"Unicusano University","correspondingAuthor":false,"prefix":"","firstName":"Carlo","middleName":"","lastName":"Drago","suffix":""},{"id":461019067,"identity":"22f0c5d7-ef25-4442-9047-5edd6d3e02bd","order_by":1,"name":"Alberto Costantiello","email":"","orcid":"","institution":"LUM UNIVERSITY GIUSEPPE DEGENNARO","correspondingAuthor":false,"prefix":"","firstName":"Alberto","middleName":"","lastName":"Costantiello","suffix":""},{"id":461019068,"identity":"54c527ff-2b47-4c53-b5a1-1d3b36e5eaa0","order_by":2,"name":"Massimo Arnone","email":"","orcid":"","institution":"University of Catania","correspondingAuthor":false,"prefix":"","firstName":"Massimo","middleName":"","lastName":"Arnone","suffix":""},{"id":461019069,"identity":"2a01c9b6-bc6f-4fea-abf5-5900839e90f6","order_by":3,"name":"Angelo Leogrande","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA9ElEQVRIiWNgGAWjYBACPijN2AAiH4AI9mYQWwKnFjYULQkJQILnIFgLTj1YtEgkgtm4tbA3H35dUXNHtp+B+ZlE4g+bfH7Jh21SNxgs6nBq4TmWZnnm2DPjmQ1sZhIJCWmWM2cntknn4HOYRI6ZYQPb4cQNB3jYgFoOGxjcJqRF/g1Qy7/DifthWuxvHiRkC4/xw8Y2oC0MMFskGAlo4UlLY2zsO2w84zCbsUVCWpqBxJnEZuscAwnJBhxa+NkPH/7Y8O2wbH9788MbH2xsDPjbDx+8nVNRx4/LFrDbwBQziqABHg1AtR/wSo+CUTAKRsEoAABg1U/Q4kxZZwAAAABJRU5ErkJggg==","orcid":"","institution":"Lum University Giuseppe Degennaro","correspondingAuthor":true,"prefix":"","firstName":"Angelo","middleName":"","lastName":"Leogrande","suffix":""}],"badges":[],"createdAt":"2025-05-23 14:16:28","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-6733648/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6733648/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":83638910,"identity":"75dc884c-6a2e-4ea6-ac3d-5fb80c5f71ec","added_by":"auto","created_at":"2025-05-30 02:29:21","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":3186572,"visible":true,"origin":"","legend":"","description":"","filename":"23052025BridgingSustainabilityandInclusion.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6733648/v1_covered_82e0ce0d-656f-437f-9ef3-1e3ff982b164.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003e\u003cstrong\u003eBridging Sustainability and Inclusion: Financial Access in the Environmental, Social, and Governance Landscape\u003c/strong\u003e\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Financial Inclusion, ESG Framework, Developing Countries, Instrumental Variables, Sustainable Development","lastPublishedDoi":"10.21203/rs.3.rs-6733648/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6733648/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis paper explores the correlation between financial inclusion and the Environment, Social, and Governance (ESG) aspects of sustainable development for a big panel of 103 developing nations over 12 years. 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