Sovereign Green Bonds, AI Adoption, and Child-Labor Policies: How Firms Translate Finance and Standards Into ESG

This paper examines how sovereign green bonds, artificial intelligence (AI) adoption, and child-labor policies relate to corporate environmental, social, and governance (ESG) performance. The analysis uses a panel of 2239 firm-year observations from 51 countries during 2019–2023 to explore these relationships. Sovereign green bonds are positively associated with governance and show a small positive link to social performance, while the environmental association is weaker, reflecting the slower pace of project execution and verification. During the COVID-19 period, the interaction between sovereign programs and the pandemic is positive for environmental and governance pillars, indicating a buffering effect. AI adoption is positively related to all three pillars. Child-labor policies are associated with higher scores, especially in the social and governance dimensions, with an additional environmental gain. These results highlight pillar-specific pathways through which public green finance, digital capabilities, and labor standards shape firm-level sustainability.