<p>This study investigates the impact of country-level Environmental, Social, and Governance (ESG) uncertainty on firm performance in the tourism and hospitality industry, with a particular focus on the moderating role of institutional quality. Using a panel dataset of 1,973 firms across 25 nations from 2003 to 2021, encompassing sub-sectors including hotels and restaurants, passenger airlines, logistics, and transportation infrastructure, the study employs two-step System GMM estimation as the primary method for causal inference, with fixed-effects models serving as descriptive baselines. ESG uncertainty significantly undermines firm performance, particularly in high-exposure sub-sectors such as hotels and leisure. Institutional quality, assessed through control of corruption, government effectiveness, and rule of law, moderates this negative relationship in a context-specific manner. Sub-sample analyses reveal two important boundary conditions: an institutional ceiling effect in developed economies, where uniformly high governance quality generates insufficient cross-sectional variance for detectable moderation; and a regulatory stringency paradox in emerging markets, where improving government effectiveness paradoxically amplifies ESG uncertainty costs in transitional environments, while control of corruption and rule of law consistently buffer firm performance. These findings carry differentiated policy implications and offer novel contributions by establishing institutional quality as a context-specific moderator of the ESG uncertainty–performance relationship.</p>