Do firms with high environment, social, and governance create more jobs?

This study analyzes the effect of firms’ ESG engagement on employment using Korean ESG evaluation data and unemployment insurance administration databases. Using a system GMM model to address reverse causality, the analysis finds that ESG scores are negatively associated with employment. However, this effect is mitigated in high-performing firms, where the interaction between ESG and firm performance shows a positive impact on employment. These results suggest that the employment effects of ESG depend on a firm’s financial capacity and strategic alignment within human resource management.