Drawing on the institutional literature as it relates to liability of foreignness and strategies to overcome those liabilities via legitimacy-enhancing strategies, we suggest that ESG performance bestows legitimacy upon foreign firms and enhances their prospects for survival. We also investigate two country-level factors that moderate the effect of ESG performance on capital market survival: the political affinity and FDI interdependence of the home and host country. High political affinity signifies aligned national interests and thus reduces perceived regulative distance and associated political risks and legitimacy concerns faced by foreign firms and therefore lessens the benefits of higher sustainability performance. Higher levels of FDI interdependence between host and home country enhances the cognitive legitimacy of a foreign firm, reducing the benefits of ESG performance as a legitimacy signal. We test our intuition on a sample of 829 foreign firms that were listed on U.S. stock exchanges between 2010 and 2021 and find support for our hypotheses.