A Tailored ESG Framework for Economic Growth in Saudi Arabia: ARDL Evidence from 1990 to 2022

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Comments to the Author (s)

Thank you for giving me the chance to review the manuscript “A Tailored ESG Framework for Economic Growth in Saudi Arabia: ARDL Evidence from 1990 to 2022”.  I wish to forward the following suggestions, which may improve the manuscript’s quality. The suggestions are as follows:

 

Abstract

The abstract looks good

 

Introduction

1. Author/s did not mentioned the previous studies have conducted the same topic and implementation, which led to insufficient contributions
2. Author/s mentioned the methodology in this part! Why?
3. Due to my knowledge, the model is not new and I have red many studies in related to this topic
4. The introduction is not well stretchered and argued
5. Absolutely, good ESG will lead to better economy, what is the new for this study?
6. Is the contribution to measure the short and long term run economy?   

 

Literature review

1. The literature review does not have a strong argued in the hypothesis development
2. The hypothesis development are separated from the literature !
3. The literature section is not well structured
4. Again, author/s mentioned the methodology part here! Strange in every section they mentioned it!
5. Author/s need to draw the framework to be more clear to the reader

 

 

Methodology

1. The methodology must present in this section
2. The OLS is quite basic technique, I suggest to use Fixed or Random effect or GMM
3. Author/s mentioned “ESG indicators are selected to match national targets such as carbon reduction”, at which percentage dose the vision 2030 target to reduce it? And how?
4. When the Saudi government started its vision 2030? Since the date approval, how much percentage of reduction they achieved?
5. Author/s need to add a table to summarize the variables and measurement, linking them with recent studies. Because methodology’s section is too confused and has many heading and sub-heading are unnecessary
6. Is the data available for ESG from 1990?

 

Results

1. This part is unorganized and confusing to the reader, author/s need to reformat this part coherently
2. There are a lot of headings and sub-headings here as well, author/s need to rearrange and summarize this section

 

Conclusion

Author did not discuss this part appropriately

 

 

 

 

 

 

 

 

 

 

Author Response

Response to Reviewer 1

Introduction

Comment 1: “Author/s did not mention the previous studies that have conducted the same topic and implementation, which led to insufficient contributions.”

Response:

We thank the reviewer for this valuable observation. In response, the Introduction and Literature Review sections have been revised to include a more comprehensive engagement with prior studies addressing ESG and economic performance. We now cite relevant research such as Ho et al. (2019), Kasztelan (2017), Friede et al. (2015), Wang et al. (2023), and Waheed et al. (2023), among others. These studies cover ESG-financial performance links, sustainable development frameworks, and macroeconomic implications in both developed and emerging economies. We explicitly clarify that while the ESG–growth relationship is widely studied at the firm level in developed markets, our contribution lies in applying a country-specific ESG index tailored to Saudi Arabia’s Vision 2030 goals, using national-level time series data. This positioning, along with a comparative discussion of the limitations in existing studies, addresses the concern about insufficient differentiation and helps articulate the unique empirical and policy relevance of our work.

Comment 2: “Author/s mentioned the methodology in this part! Why?”

Response:

We appreciate the reviewer’s attention to academic structure. In the revised manuscript, we have removed any detailed mention of methodology from the Introduction and Literature Review sections. Instead, we now briefly state that the study evaluates both short- and long-term effects of ESG performance on economic growth, while reserving all technical and model-specific explanations (such as the use of OLS and ARDL models) for the Methodology section (Section 3).

Comment 3: “Due to my knowledge, the model is not new and I have read many studies in related to this topic.”

Response:

Thank you for this important observation. We fully agree that the econometric models used in this study—Ordinary Least Squares (OLS) and Autoregressive Distributed Lag (ARDL)—are established in the literature. Our study does not claim methodological novelty. Instead, we clarified in the revised Introduction that the study’s contribution lies in its application of these models to a unique national context. Specifically, we constructed a tailored ESG index aligned with Saudi Arabia’s Vision 2030 priorities and applied it in a long-term macroeconomic analysis. This national-level, context-specific approach addresses an underexplored gap in the literature, especially for resource-dependent economies undergoing structural reform. Thus, while the methodology is standard, the framing, scope, and empirical focus of the study provide a distinct and relevant contribution.

Comment 4: “The introduction is not well structured and argued.”

Response:

Thank you for this constructive feedback. In the revised manuscript, we thoroughly restructured the Introduction to improve clarity, coherence, and argumentative strength. The revised version follows a logical progression, beginning with the global significance of ESG in policy and development, then narrowing the focus to the unique challenges facing resource-dependent economies like Saudi Arabia. We identified the gap in the literature—namely, the lack of macroeconomic studies using tailored ESG indices in such contexts—and clearly stated our research question and objectives. Finally, we articulated the study’s contributions, positioning it as a response to the need for national-level ESG evaluation tools aligned with long-term development strategies such as Vision 2030. These revisions ensure a stronger foundation for the rest of the paper and directly address the concerns raised.

Comment 5: “Absolutely, good ESG will lead to better economy, what is the new for this study?”

Response:

We appreciate the reviewer’s thoughtful question. While the general relationship between ESG and economic performance is widely acknowledged, this study introduces several novel contributions. First, we construct a customized ESG index tailored to the Saudi Arabian context, incorporating indicators that reflect Vision 2030 priorities, such as emissions targets, institutional effectiveness, and gender inclusion. Second, we use national time series data spanning 1990 to 2022 to estimate both short-run and long-run effects of ESG on economic growth—an approach that is uncommon in the current literature, which is dominated by cross-country or firm-level analyses. Third, we compare the predictive power of disaggregated ESG dimensions with that of a composite index, highlighting the added value of integrated sustainability strategies. These elements advance the literature on ESG and provide a replicable model for resource-dependent economies undergoing structural transformation.

Comment 6: “Is the contribution to measure the short and long term run economy?”

Response:

Thank you for this important question. While measuring the short- and long-term effects of ESG performance on economic growth is one component of our analysis, it is not the sole contribution of this study. Our broader aim is to address key gaps in the literature related to ESG application in resource-dependent economies. Specifically, we (i) construct a context-specific ESG index aligned with Saudi Arabia’s Vision 2030 targets, (ii) apply it to national-level time series data over three decades, and (iii) examine both disaggregated and integrated ESG dimensions using appropriate econometric models. The inclusion of ARDL modeling allows us to estimate dynamic relationships, but our main contribution lies in linking tailored ESG metrics to macroeconomic performance in a policy-relevant national context. This approach extends the relevance of ESG research beyond firm-level financial outcomes and contributes to the understanding of sustainability transitions in emerging economies.

Literature Comments (1-5):

“The literature review does not have a strong argued in the hypothesis development. The hypothesis development are separated from the literature! The literature section is not well structured. Again, author/s mentioned the methodology part here! Strange in every section they mentioned it! Author/s need to draw the framework to be more clear to the reader.”

Response:

We thank the reviewer for this comprehensive feedback. In response, we have fully revised and restructured the Literature Review and Hypothesis Development section to address the identified concerns. The revised version now follows a logical academic structure, beginning with a review of key theoretical foundations such as stakeholder theory, sustainability transitions theory, and institutional economics. These frameworks are then directly linked to the empirical literature, forming a consistent basis for hypothesis development.

Each hypothesis (H1, H2, and H3) is now embedded within the relevant theoretical and empirical discussion, rather than being listed in isolation. This approach ensures a stronger argumentative flow and better integration with the literature. We have also removed all misplaced references to methodology (e.g., OLS, ARDL) from the literature review to avoid confusion and maintain structural consistency.

In addition, we have included a clearly labelled conceptual framework figure (Figure 1), which visually summarizes the relationships among ESG components, traditional economic drivers, and GDP growth. This figure is now referenced in the text to support and clarify the hypothesis structure for the reader.

Methodology

Comment 1: “The methodology must present in this section.”

Response:

We appreciate the reviewer’s reminder on maintaining section consistency. In the revised manuscript, we have ensured that all methodological content—including model specifications, estimation strategy, data characteristics, and diagnostic procedures—is presented exclusively within the Methodology section. Any previously misplaced references to methodology in other sections, such as the Introduction or Literature Review, have been removed.

The Methodology section now clearly outlines the rationale for using Ordinary Least Squares (OLS) and Autoregressive Distributed Lag (ARDL) models based on the time series structure of our data. It also details the construction of the tailored ESG index, describes each variable, and presents the statistical tests used (e.g., stationarity checks using ADF tests, diagnostic testing for autocorrelation and heteroscedasticity). This focused and comprehensive structure ensures that the methodology is clearly presented, self-contained, and reproducible.

Comment 2: “The OLS is quite basic technique; I suggest to use Fixed or Random effect or GMM.”

Response:

Thank you for this helpful observation. We acknowledge that Ordinary Least Squares (OLS) is a basic econometric technique and is typically limited in dynamic or panel data settings. However, our study is based on a single-country time series (Saudi Arabia) covering the years 1990–2022. This structure does not meet the requirements for panel-based methods such as Fixed Effects, Random Effects, or Generalized Method of Moments (GMM), which are appropriate only when multiple cross-sectional units are observed over time.

To address concerns about the limitations of OLS and to strengthen the robustness of our findings, we supplemented the OLS analysis with the Autoregressive Distributed Lag (ARDL) model. The ARDL approach is well-suited for time series data with mixed levels of integration and allows us to estimate both short-run and long-run relationships between variables. We also conducted stationarity tests and diagnostic checks to validate the use of this model.

We believe that this dual-method approach is appropriate for the structure of our data and helps address the reviewer’s concerns regarding model adequacy.

Comment 3: “Author/s mentioned ‘ESG indicators are selected to match national targets such as carbon reduction’, at which percentage does the Vision 2030 target to reduce it? And how?”

Response:

Under the Saudi Green Initiative, the Kingdom pledged to reduce 278 million tons of CO₂ emissions annually by 2030, with a broader goal of achieving net-zero emissions by 2060 (Saudi Green Initiative, 2021). This target is supported by key policy measures, including phasing out liquid fuels in the power sector, expanding renewables to cover 50% of electricity generation, and investing in carbon capture technologies (Vision 2030, 2016; Ministry of Energy, 2022). According to World Bank data, Saudi Arabia’s CO₂ emissions per capita declined from 20.51 metric tons in 2016 to 18.73 in 2023—an approximate 4.9% reduction. While not a direct proxy for national totals, this trend reflects measurable progress. Additionally, recent empirical evidence by Abdelkawy, Alshamery, and Aljohar (2024) shows that renewable energy policy reforms introduced between 2019 and 2020 have significantly influenced the relationship between FDI, renewable energy use, and GDP—highlighting the structural impact of these environmental policy shifts.

Comment 4: “When did the Saudi government start Vision 2030? Since the date of approval, how much percentage of reduction have they achieved?”

Response:

We thank the reviewer for this important question. Vision 2030 was officially launched by the Saudi government in April 2016. Since then, measurable progress has been observed in key sustainability indicators. According to World Bank data, CO₂ emissions per capita in Saudi Arabia decreased from 20.51 metric tons in 2016 to 18.73 metric tons in 2023, representing an approximate 4.9% reduction.

While this reduction is measured on a per capita basis and not as total national emissions, it signals early alignment with national decarbonization goals. These include the Saudi Green Initiative’s target of reducing 278 million tons of CO₂ annually by 2030, supported by major reforms such as expanding renewable energy to supply 50% of electricity, phasing out liquid fuels, and advancing carbon capture technologies.

Comment 5: “Author/s need to add a table to summarize the variables and measurement, linking them with recent studies. Because methodology’s section is too confused and has many heading and sub-heading are unnecessary”

Response:

We thank the reviewer for this helpful suggestion. In response, we have added a new summary table (Table 1) in the Methodology section. This table lists all variables used in the analysis, including their definitions, units of measurement, data sources, and corresponding citations from recent studies. This addition aims to improve clarity and transparency regarding variable selection and how each aligns with both Vision 2030 goals and previous ESG-related research.

Additionally, we revised the structure of the Methodology section by removing unnecessary subheadings and ensuring a smoother flow. The section now presents the data, index construction, model design, and diagnostics in a coherent narrative, consistent with academic writing standards.

 

Comment 6: “Is the data available for ESG from 1990?”

Response:

Yes, thank you for your important question. We confirm that all ESG indicators used in this study are available for Saudi Arabia from 1990 onward. The data were obtained from internationally recognized and consistent sources, including the World Bank, IEA, WHO, UNESCO, and the Worldwide Governance Indicators (WGI). Specifically, the environmental indicators (e.g., CO₂, methane, and nitrous oxide emissions), social indicators (e.g., female labor force participation, unemployment rate, life expectancy, and tertiary education parity), and governance indicators (e.g., government effectiveness and political stability) all have complete annual time series coverage from 1990 to 2022. This data availability allows us to construct the ESG index without interpolation or imputation and ensures the robustness of our time series econometric analysis.

Results Comments (1&2):

“This part is unorganized and confusing to the reader. Author/s need to reformat this part coherently. There are a lot of headings and sub-headings here as well. Author/s need to rearrange and summarize this section.”

Response to Reviewer Comment – Results Section:

We thank the reviewer for highlighting this issue. In response, we have extensively revised the Results section to improve its organization, clarity, and narrative flow. First, we removed unnecessary headings and subheadings to streamline the structure and reduce fragmentation. Second, we relocated the descriptive ESG trends—which were previously presented under separate ESG component sub-sections—to the Methodology section, where the ESG framework and variable construction are discussed. This eliminates redundancy and allows the Results section to focus strictly on presenting empirical findings.

We also ensured that the results are now clearly linked to the study’s hypotheses and interpreted in light of the broader literature. Regression results and diagnostic outputs are presented in a more concise, cohesive manner, with each finding summarized in the main text and directly referenced to the appropriate tables (Tables 4 to 12). This revision improves the coherence of the empirical discussion and enhances the readability of the section. We believe the new structure aligns with journal standards and better supports the paper’s analytical depth.

Conclusion Comment: “Author did not discuss this part appropriately.”

Response:

We thank the reviewer for the valuable feedback on the Conclusion section. In response, we have fully rewritten this section to provide a clear and structured synthesis of the study. The revised conclusion begins by reiterating the study’s main objective—examining the macroeconomic effects of ESG performance using a tailored index aligned with Saudi Arabia’s Vision 2030. It then summarizes the core empirical findings, particularly the contrast between the limited short-term impact of disaggregated ESG components and the significant long-term influence of the composite index.

We further clarified the broader relevance of these findings by linking them to key theoretical frameworks and policy priorities, demonstrating how ESG can serve as a strategic lever for diversification and economic resilience in resource-dependent contexts. The revised conclusion also acknowledges key limitations, such as relying solely on GDP as a performance proxy, and proposes directions for future research, including the use of multidimensional indicators and cross-country applications. These improvements ensure that the conclusion aligns more effectively with the evidence presented and offers a coherent closure to the manuscript.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

Thank you for given me the opportunity to review this manuscript. While the study has some research significance, there are also several critical issues that raise major concerns about the manuscript.

1. The current introduction is too simplistic and fails to highlight the importance, innovation, and contributions of the research. In the introductory section, the authors need to establish the real problem in the society that brings us to this point of the research. Once it established as a real problem in the society that needs to be addressed, then the authors need to highlight why this is important to be addressed and what the others have done to address this problem. Then, they need to talk about the research gap and what is unknown. Then, establish their motivation to address that gap. in the introduction also there is a need to write a couple of lines about the findings and a summary of contributions.
2. The literature review is far too simplistic, and I can hardly extract any valuable information from it. The current research review does not highlight the gaps in the research or explain why the author conducted this study.
3. The formulation of research hypotheses lacks a theoretical foundation.
4. The reporting of the results lacks coherence.
5. What are the theoretical implications of the research findings, and what are the practical insights? The current description is too vague and lacks engagement with existing literature.
6. I suggest that the author strictly refer to the journal's relevant writing guidelines to format the paper before submission.

Author Response

2^nd reviewer

Reviewer Comment1:

“The current introduction is too simplistic and fails to highlight the importance, innovation, and contributions of the research. In the introductory section, the authors need to establish the real problem in the society that brings us to this point of the research. Once it is established as a real problem in the society that needs to be addressed, then the authors need to highlight why this is important to be addressed and what the others have done to address this problem. Then, they need to talk about the research gap and what is unknown. Then, establish their motivation to address that gap. In the introduction also there is a need to write a couple of lines about the findings and a summary of contributions.”

Author Response:

We sincerely thank the reviewer for this constructive and detailed comment. In response, we have substantially revised the Introduction to align with your suggestions. We now begin by establishing a clear real-world problem: the urgency for resource-dependent economies like Saudi Arabia to diversify economically while ensuring long-term sustainability. This is framed as a key development challenge, particularly in light of climate change, volatile oil markets, and structural unemployment. We then clarify why ESG integration is critical to addressing this societal challenge.

The revised text explains that while ESG is globally promoted, most empirical studies focus on firm-level or developed economy contexts. This leaves a research gap concerning how ESG functions as a macroeconomic driver in emerging, oil-dependent economies. We now clearly highlight this gap and our motivation to address it by constructing a Saudi-specific ESG index aligned with Vision 2030 and evaluating its effect on GDP growth over the long-term using national time series data.

Furthermore, we added 1–2 lines summarizing the main findings—that disaggregated ESG components show weak short-term effects, while a composite index significantly supports long-run growth. We also include a brief summary of the study’s contributions, both theoretical (extending ESG analysis to the macro-policy level) and practical (offering a replicable ESG framework tailored to Vision 2030). These enhancements aim to present a more focused and impactful introduction, as the reviewer recommended.

We are grateful for your guidance, which helped us strengthen the clarity, structure, and significance of the study from the outset.

Reviewer Comment 2:

“The literature review is far too simplistic, and I can hardly extract any valuable information from it. The current research review does not highlight the gaps in the research or explain why the author conducted this study.”

Author Response:

We thank the reviewer for this important observation. In the revised manuscript, we have significantly strengthened the Literature Review and Hypothesis Development section to address these concerns. The new version integrates both theoretical and empirical strands of the literature, drawing on stakeholder theory, sustainability transitions, and institutional economics to establish a conceptual foundation. We also incorporate a wide range of recent empirical studies that examine ESG’s relationship with economic growth across different contexts.

Crucially, we now include a clearly labeled “Research Gap and Study Contribution” subsection. This explicitly identifies the limitations of existing ESG research—such as its predominant focus on firm-level data in developed markets and the absence of context-specific macroeconomic analysis for resource-dependent countries like Saudi Arabia. We clarify how our study addresses these gaps by constructing a tailored ESG index aligned with Vision 2030 and testing its long-term macroeconomic impacts using robust time-series analysis.

These revisions ensure that the literature review now serves not only as a theoretical overview, but also as a logical foundation for our research motivation, questions, and contributions. We hope this improved structure and depth meet the reviewer’s expectations.

Reviewer Comment 3:

“The formulation of research hypotheses lacks a theoretical foundation.”

Author Response:

We appreciate this important comment. In response, we have revised the Literature Review and Hypothesis Development section to ensure that each hypothesis is now clearly grounded in relevant theoretical frameworks. Specifically, the revised text draws on stakeholder theory (Freeman, 1984), sustainability transitions theory (Markard et al., 2012), and institutional economics (North, 1990; Acemoglu & Robinson, 2012) to explain the mechanisms through which ESG components may influence macroeconomic performance.

Each hypothesis is now embedded in analytical paragraphs that link these theoretical foundations to empirical findings and the Saudi Arabian policy context. This structure ensures that the hypotheses logically follow from both the academic literature and the structural realities of resource-dependent economies. We believe these revisions strengthen the conceptual clarity of the study and provide a well-justified basis for empirical testing.

Reviewer Comment 4:

“The reporting of the results lacks coherence.”

Author Response:

Thank you for this valuable observation. In response, we have thoroughly revised the Results and Discussion section to improve narrative flow, coherence, and linkage to the study’s hypotheses and theoretical foundations. The results are now presented in a sequential and structured manner: beginning with descriptive statistics and correlation analysis, followed by regression results for both disaggregated and composite ESG indices, and concluding with ARDL long-run estimates and model comparisons.

Each set of findings is now clearly explained with direct references to corresponding tables and interpreted in light of the research hypotheses (H1–H3). The discussion also integrates theoretical insights—such as the delayed impact of environmental reforms or the synergy across ESG dimensions—making the interpretation more coherent and policy-relevant. We have removed fragmented headings and redundant content, and we organized the text to maintain a smooth narrative throughout the section.

Reviewer Comment 5:

“What are the theoretical implications of the research findings, and what are the practical insights? The current description is too vague and lacks engagement with existing literature.”

Author Response:

We appreciate this important feedback. In the revised Conclusion and Policy Implications section, we have clarified and expanded both the theoretical and practical contributions of the study.

Theoretically, our findings extend ESG literature into the macroeconomic policy domain by demonstrating that ESG performance—when integrated holistically across environmental, social, and governance dimensions—has a measurable long-run impact on GDP growth in resource-dependent economies. This supports and builds on sustainability transitions theory, stakeholder theory, and institutional economics by showing how coordinated ESG reforms can enable structural economic transformation. We now explicitly reference supporting studies, such as Friede et al. (2015), Wang et al. (2023), and Acemoglu & Robinson (2012), to reinforce these implications.

Practically, the study provides a replicable framework for national-level ESG assessment aligned with Saudi Arabia’s Vision 2030. The results offer actionable insights for policymakers: isolated reforms in ESG dimensions yield limited short-term effects, while integrated ESG strategies produce stronger long-term growth outcomes. This highlights the importance of coherence in national ESG planning and the need for institutional coordination. We have clearly stated these recommendations and linked them to recent literature and policy frameworks, enhancing both relevance and academic engagement.

Reviewer Comment 6:

“I suggest that the author strictly refer to the journal’s relevant writing guidelines to format the paper before submission.”

Author Response:

Thank you for your helpful suggestion. We have thoroughly revised the manuscript to ensure full compliance with Sustainability’s formatting and style guidelines. This includes adjustments to section headings, citation style, reference formatting, table presentation, figure labeling, and data availability statements. We also removed all bullet points and non-standard formatting elements, ensuring a consistent academic tone throughout the manuscript. The revised submission reflects the structural and stylistic standards required by the journal.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

Dear authors. Thank you for the opportunity to review this paper, which covers an interesting and trending topic in accounting and reporting (namely, ESG). Overall, I think that what is missing is a better structure. It seems, sometimes, that the paper was written with AI assistance tools since bullets and titles with short text frequently emerge. This also makes the paper significantly confusing for readers. The hypotheses also appear with no significant engagement with the theoretical background. A proper discussion is missing, or it is significantly dispersed, as well as the practical and theoretical contributions. The methods do not allow replication, considering the "noise" around the paper in its current structure. Finally, I am not sufficiently convinced about the theoretical and practical gaps this paper intends to solve, which needs to be stressed within the introduction and literature review. All those aspects, put together, make it difficult to have a comprehensive understanding of the theories on which this paper is based, the methods applied in each stage, its findings and, finally, its contributions. To summarise, I would suggest an overall revision of the text and the paper's structure before resubmitting it for peer review. Thank you again, and I wish authors all the best.   

Author Response

3rd  Reviewer

Reviewer Comment 1:

“Overall structure is lacking; presence of bullets and short-titled sections is confusing and gives an impression of AI-generated text.”

Author Response:

Thank you for this important observation. In response, we have undertaken a thorough structural and content revision of the manuscript. All bullet points, short subheadings, and any formatting that might suggest artificial generation have been removed, ensuring a narrative structure throughout the manuscript.

Reviewer Comment 2:

“Hypotheses appear with no significant engagement with theoretical background.”

Author Response:

We acknowledge this concern and have taken steps to ensure that each hypothesis is now firmly grounded in relevant theoretical frameworks. In the revised Literature Review and Hypothesis Development section, we discuss key theories such as stakeholder theory (Freeman, 1984), sustainability transitions theory (Markard et al., 2012), and institutional economics (North, 1990; Acemoglu & Robinson, 2012). The development of the hypotheses is now logically integrated into these discussions and supported with recent empirical findings (e.g., Friede et al., 2015; Wang et al., 2023; Ali et al., 2019), providing a stronger conceptual foundation for the research.

Reviewer Comment 3:

“A proper discussion is missing or is significantly dispersed.”

Author Response:

We thank the reviewer for this important observation. In response, we have fully revised the Results and Discussion section to ensure a focused and coherent interpretation of the empirical findings. The discussion is now explicitly tied to the study’s objectives and research questions, highlighting how each result relates to the tested hypotheses. We removed redundant subheadings and combined interpretation and analysis into unified thematic paragraphs. The discussion now draws directly on the study’s theoretical foundations—particularly stakeholder theory, sustainability transitions, and institutional economics—and is supported by relevant empirical literature.

We also clarified the broader policy relevance of the findings, showing how ESG performance—especially when applied as an integrated framework—can support Saudi Arabia’s long-term economic diversification goals under Vision 2030. This revision ensures that the discussion section provides a structured narrative that links empirical results to theoretical expectations and policy implications in a clear and academically rigorous manner.

Reviewer Comment 4:

“Practical and theoretical contributions are unclear.”

Author Response:

We appreciate this important observation. In the revised manuscript, we have clarified both the theoretical and practical contributions throughout the Introduction, Discussion, and Conclusion sections. Theoretically, the study contributes by constructing a tailored ESG index aligned with Saudi Arabia’s Vision 2030 and applying it in a macroeconomic context, which is underexplored in existing literature. This advance understanding of how ESG frameworks operate in resource-dependent economies. Practically, we provide evidence that integrated ESG reforms—when aligned with national priorities—can contribute to long-term economic resilience. The Policy Implications section now outlines clear recommendations for institutional reform, ESG-aligned investment, and policy coordination, reinforcing the study’s relevance for decision-makers.

Reviewer Comment 5:

“Methods section lacks clarity and reproducibility due to structural issues.”

Author Response:

Thank you for this valuable comment. In the revised manuscript, we have thoroughly rewritten the Methodology section to ensure full transparency and clarity. We now clearly explain the construction of the tailored ESG index, including the data sources, selected indicators, and standardization method. Each variable used in the models is defined in a newly added summary table. We also justify our use of OLS and ARDL models, considering the time series structure of the data. Diagnostic checks for stationarity, multicollinearity, autocorrelation, and heteroskedasticity are reported to support model validity.  By moving descriptive ESG trends from the Results to the Methodology, we eliminated overlap and reinforced the technical focus of the section.

Reviewer Comment 6:

“The paper does not convincingly present the theoretical and practical gaps it addresses.”

Author Response:

We appreciate this important observation. The revised Introduction and Literature Review now explicitly define the key gaps our study addresses. Theoretically, we emphasize that while ESG frameworks are widely discussed, most existing studies focus on firm-level applications in advanced economies. There is limited macro-level research on ESG’s economic implications in resource-dependent countries. Practically, we note the absence of tailored ESG indices aligned with national development agendas such as Vision 2030. Our study addresses these gaps by constructing a Saudi-specific ESG index and empirically examining its short- and long-term effects on GDP using national time series data from 1990 to 2022. These revisions strengthen the study’s relevance and highlight its contribution to the broader ESG literature. The contributions are now clearly presented in the updated text, positioning the study as both a novel and policy-relevant addition to the literature on sustainable development.

Reviewer Comment 7:

“Overall revision needed before resubmission.”

Author Response:

We thank the reviewer for this overall recommendation. We took this feedback seriously and carried out an extensive revision of the entire manuscript. Each major section was restructured, formatting issues were resolved, and the manuscript was thoroughly rewritten to improve clarity, coherence, and academic rigor. We improved the integration of theoretical frameworks, strengthened the link between the hypotheses and discussion, clarified the methodological design, and refined the narrative flow throughout the paper. We hope that the revised version now meets the standards expected by Sustainability and reflects the improvements suggested by the review process.

 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

The authors have thoroughly revised the manuscript in line with the suggestions provided. I have no remaining concerns and extend my best wishes to the authors for the successful publication of their work.

Author Response

We sincerely thank the reviewer for their thoughtful feedback throughout the revision process. We appreciate your acknowledgment of the revisions made and your kind wishes. Your insights have contributed significantly to strengthening the clarity and overall quality of the manuscript.

Reviewer 2 Report

Comments and Suggestions for Authors

The author's response is brief and fails to adequately address my previous round of review comments. I believe the revised manuscript does not meet the publication standards of Sustainability.

Author Response

We sincerely thank you for your continued time and effort in reviewing our manuscript. We appreciate your honest feedback and constructive suggestions, which have been invaluable in strengthening our study and regret that our previous responses did not fully meet your expectations.

In response, we undertook substantial and detailed revisions to address each of these points point-by-point:

Comment 1: “The current introduction is too simplistic and fails to highlight the importance, innovation, and contributions of the research…”

Response 1: Thank you for highlighting this concern. We have significantly revised the Introduction section to address each of your suggestions:

Problem Importance: We begin with the national development dilemma Saudi Arabia faces, emphasizing the transition from fossil fuel dependence to a diversified, innovation-driven economy.

“Saudi Arabia faces a critical sustainability dilemma: how to transition from fossil fuel dependence to a diversified, innovation-driven economy without compromising long-term development goals.”

This frames the structural transformation as not only economic but also societal—affecting governance, equity, and sustainability.

Why This Problem Matters:  We explain why this problem is significant by placing it in a global and policy context:

“In recent years, the global shift toward sustainability-focused development has elevated the importance of ESG frameworks… This is especially true for resource-dependent economies like Saudi Arabia, where structural diversification is both a national imperative and a developmental challenge.”

What Others Have Done: We clarify that most prior ESG frameworks are designed for developed, firm-level contexts and do not address macroeconomic transitions in emerging economies. We then define our contribution: a tailored ESG index for Saudi Arabia.

“Although ESG frameworks are widely adopted… Most existing frameworks and empirical analyses are designed for developed markets and focus primarily on firm-level financial performance or compliance reporting… these approaches often fail to account for the policy-driven, macroeconomic transitions occurring in emerging economies.”

The Research Gap and What is Unknown: We clearly articulate the gap as follows:

“There remains a significant gap in understanding how ESG progress—when aligned with such national priorities—affects long-term macroeconomic outcomes.”

And further:

“Most existing studies remain descriptive or limited to micro-level assessments, lacking a tailored ESG framework suited to the Saudi context.”

“To address this gap, the present study constructs a country-specific ESG index tailored to Vision 2030 priorities and empirically evaluates its short- and long-term effects on Saudi Arabia’s GDP using OLS and ARDL models.”

Motivation and Findings: The introduction now states the research motivation, methodology, main findings, and a concise list of contributions (at the end of the section), including:

1. A context-specific ESG index aligned with Vision 2030;
2. Empirical evaluation of ESG’s long- and short-term effects;
3. Practical policy insights for emerging economies.

Summary of Findings: We provide a concise report of empirical results:

“Our findings show that while disaggregated ESG components lack short-run statistical significance, the composite ESG index has a strong long-run positive effect on GDP.”

Summary of Contributions: We now end the introduction with a clear 3-point summary of the study’s key contributions

“This study contributes to the literature by: (i) introducing a Saudi-specific ESG framework aligned with Vision 2030; (ii) empirically analyzing ESG’s macroeconomic effects in a resource-based economy; and (iii) providing policy-relevant insights for emerging economies seeking to institutionalize ESG as a development tool.”

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Comment 2:

“The literature review is far too simplistic, and I can hardly extract any valuable information from it…”

Response 2:

We have extensively revised the Literature Review and Hypotheses Development section to improve depth, structure, and theoretical foundation.

From Simplistic to Structured: Organized into Theoretical and Empirical Foundations

We divided the section into two clear parts: Theoretical Foundations and Empirical Evidence to improve depth and readability. This allows us to anchor our study in recognized theories and follow with recent empirical findings that justify the study’s design.

Theory: We grounded our framework in three main theories

• Stakeholder Theory
• Sustainability Transitions Theory
• Institutional Economics

Highlighting Gaps in the Literature: We explicitly identify the gap in macro-level ESG studies in non-Western, resource-rich contexts and emphasize the lack of tailored indices aligned with national development plans.

“Despite the growing interest in ESG, the macroeconomic relevance of these frameworks in non-Western, resource-dependent contexts remains underexplored.”

Later we reinforce it:

“No prior study has applied a context-specific ESG index in Saudi Arabia to assess its long-run macroeconomic effects.”

This clearly explains why the study is needed and what is missing in existing literature.

Saudi-Specific Focus: We stress the novelty of applying a Vision 2030-aligned ESG index and reinforce the rationale for our empirical models (OLS and ARDL).

“Frameworks such as SASB… remain primarily focused on corporate-level reporting in developed markets… This underscores the need for national-level, policy-aligned ESG indices in emerging economies.”

Summary of Contributions and Research Gap

We now have a clearly marked section titled “Research Gap and Study Contribution”, which directly lists the study’s key gaps and how they are addressed:

(i) constructing a tailored ESG index aligned with Saudi Arabia’s Vision 2030 priorities,

(ii) empirically testing its macroeconomic effects using long-term national data from 1990 to 2022,

(iii) analyzing both disaggregated and composite ESG impacts through robust econometric techniques.

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Comment 3:

“The formulation of research hypotheses lacks a theoretical foundation.”

Response 3:

Thank you for pointing this out. We have revised the Hypothesis Development section to ensure all three hypotheses are explicitly linked to the theories discussed earlier:

We introduced a new subsection titled “Theoretical Foundations”, where we explicitly link the study’s rationale to three major theories:

Stakeholder Theory:

“Stakeholder theory emphasizes that institutions must consider broader societal impacts, not just shareholder returns… where governments must address social equity, environmental protection, and governance quality.”

Sustainability Transitions Theory:

“Achieving long-term development requires systemic shifts toward low-carbon, inclusive growth models.”

Institutional Economics:

“Effective institutions, transparency, and anti-corruption measures are essential to ESG success… governance constraints can limit diversification… strategic ESG adoption may help overcome such barriers.”

Theoretical Justification Embedded Within Each Hypothesis

We ensured that each hypothesis is not only stated clearly but also directly follows from the literature and theory:

• H1: Reflects lag effects in disaggregated ESG indicators, justified by policy sequencing theory.

“…due to implementation lag and policy sequencing. Prior studies show that environmental and social reforms take time to influence macroeconomic indicators and require institutional support to be effective.”

• H2: Draws from Sustainability Transitions Theory, emphasizing the strength of coordinated reforms.

“An integrated approach better reflects the interdependence of sustainability reforms and can promote long-term structural change.”

• H3: Grounded in EKC and Institutional Economics, explaining why oil rents remain influential in the short term.

“…environmental improvements often follow initial stages of resource-driven growth as institutions mature.”

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Comment 4: “The reporting of the results lacks coherence.”

Response 4:

We have restructured the Results section to improve clarity, narrative flow, and direct linkage to the hypotheses:

Here is what we specifically revised:

Improved Structure and Flow: We reorganized the Results and Discussion section into a step-by-step sequence, covering:

• Descriptive Statistics and Correlations
• Short-Run and Long-Run ARDL Estimates
• Composite ESG vs Disaggregated Components
• Diagnostic Checks and Robustness Tests

Hypothesis Alignment: Each part of the results section now refers explicitly to the corresponding hypothesis

Removed Redundancies and Clarified Transitions: We revised transitions, avoided redundant headings, and ensured each table is clearly referenced and explained.

Strengthened Integration with Literature: We added brief comparative citations (e.g., Wang et al. 2023, Azam et al. 2023) to contextualize our findings within existing literature.

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Comment: 5: “What are the theoretical implications of the research findings, and what are the practical insights? The current description is too vague and lacks engagement with existing literature.”

Response 5: We expanded the Discussion and Policy Implications sections to clearly articulate both theoretical and practical contributions.

Theoretical Implications:

We clarified the theoretical relevance of our results by linking them to three major frameworks:

• Confirm the value of integrated ESG policies using Sustainability Transitions Theory.
• Reinforce Stakeholder Theory by showing long-term benefits of inclusive ESG planning.
• Support Institutional Economics, demonstrating the importance of governance.

This is now reflected in the revised Discussion (pp. 23–25) and Conclusion (p. 26).

Practical Insights:

We detailed actionable lessons for policymakers, such as:

• ESG components alone yield limited growth effects unless implemented in a coordinated, composite framework.
• ESG strategies aligned with national development plans like Vision 2030 generate more robust long-term outcomes.
• Institutional quality-especially governance-magnifies the impact of environmental and social reforms.

These are now emphasized in the updated Policy Implications section:

 “Practically, this implies that ESG alignment with Vision 2030 is not symbolic; it fosters regulatory learning, encourages investment, and accelerates sectoral innovation, particularly in clean energy and institutional modernization.”

And:

“From a practical standpoint, this research offers policymakers a replicable model to embed ESG integration into national strategy, helping transform reform commitments into measurable outcomes that support diversified, sustainable growth.”

Literature Engagement

We have also increased references to supporting literature. Notable additions include:

• Friede et al. (2015) – on the ESG–performance relationship,
• Wang et al. (2023) – on ESG in emerging markets,
• Azam et al. (2023) – on governance as a key ESG dimension.

We have also added this summarizing sentence:

“The study’s results hold both theoretical and practical relevance: theoretically, they validate frameworks linking sustainability transitions to macroeconomic performance; practically, they offer a tool for tracking reform progress and guiding policy design.”

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Comment 6: “I suggest that the author strictly refer to the journal's relevant writing guidelines to format the paper before submission.”

Response 6: We thank the reviewer for this valuable suggestion. We have carefully reviewed Sustainability’s author guidelines and made the necessary formatting adjustments. This includes:

• Structuring the manuscript in line with the journal’s required section order and formatting style,
• Applying the correct in-text citation format using numbered references in square brackets,
• Ensuring consistency in figure and table titles, section headings, and spacing,
• Revising the reference list to match the journal’s numbered citation style and formatting rules.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

The authors have satisfactorily solved the issues indicated in my previous report. Well-done. Thank you so much. 

Author Response

We are grateful for your positive feedback and are pleased to hear that the revisions have addressed your concerns. Thank you for your encouraging words and support during the review process.

Round 3

Reviewer 2 Report

Comments and Suggestions for Authors

After reviewing the author’s revisions and responses, I confirm that they have adequately addressed all my previous comments and suggestions. At this stage, I have no further requests for revisions and am satisfied with the manuscript in its current form.