Governance and Digitalization: Exploring the Impact of E-Government Development on Sustainability Metrics

Sovereign ESG scores are widely used to assess a country’s sustainability, resilience, and institutional strength. However, they often overlook a crucial dimension—digitalization. As governments increasingly rely on digital tools to enhance transparency, efficiency, and public service delivery, their capacity to achieve sustainable development has become closely tied to their e-government capabilities. This study investigates whether digital governance, measured by the E-Government Development Index (EGDI), should be integrated into sovereign ESG assessments. Using panel data from 2003 to 2021 across multiple countries, we examine the relationship between EGDI and national sustainability, as captured by the Sustainable Development Goals (SDG) Index. By combining traditional governance indicators from the World Bank Sovereign ESG Portal with digitalization metrics such as online services, telecommunication infrastructure, and human capital, we employ machine learning methods to evaluate their predictive contribution. The results reveal that e-government has a significant and positive impact on sustainability outcomes, underscoring the importance of incorporating digitalization into ESG frameworks. As digital transformation reshapes governance, ESG assessments must evolve accordingly to offer a more accurate depiction of a nation’s long-term stability and its capacity to address economic, social, and environmental challenges.