Introduction
In recent years, Environment, Social and Governance (ESG) considerations have emerged as a crucial aspect affecting the corporate environment and investment decisions at a global level. The incorporation of ESG principles into business strategies is increasingly becoming a popular topic of discussion among the corporate decision makers, policy makers, scholars as well as investors. This research paper aims to explore the impact of ESG on corporate performance on one hand and investor decision-making on the other, considering its influence on strategic decision-making processes of corporates and the effect it has on investment decisions.
The growing recognition of ESG factors comes as a result of the realisation that business operate within a broad socio-environment structure and their actions can create a huge impact not only on the financial metrics, but on various social and environment concerns. By incorporating ESG considerations into their policies and operations, companies acknowledge their responsibilities towards the society and align their interests with broader societal goals. ESG principles ensure the long-term sustainability of corporates and links to an enhanced financial performance by attracting investments.[1]
This research paper addresses the nature of relationship between ESG practices and corporate performance and determines how ESG considerations influence strategic decision-making processes within an organization. The paper reiterates the importance of ESG factors in shaping investors’ perceptions and its influence on investment decisions. It also explores various regulatory frameworks which impact the integration of ESG into corporate strategies.
By addressing these concerns, the research paper aims to contribute to the existing literature on ESG by offering valuable insights and practical implications for corporate decision-makers, investors, policymakers and stakeholders. It sheds light on the potential of ESG in the development of long-term value for corporates, mitigating risks and making a positive impact on society.
[1] Zhan, Shuyuan “ESG and Corporate Performance: A Review.” SHS Web of Conferences. 169. (2023)