Reimagining ESG in Business Management: A Theoretical Exploration of Emerging Trends and Future Directions

In the corporate world, environmental, social, and governance (ESG) considerations are becoming essential pillars of strategic decision-making, rather than being seen as optional or regulatory checkboxes (Eccles et al., 2014; Kotsantonis & Serafeim, 2019). Growing awareness of social inequality, climate change, ethical governance, and the pressing need for sustainable corporate practices – particularly in the wake of the COVID-19 pandemic – have all contributed to this development (UNPRI, 2021; World Economic Forum, 2023). ESG factors are now ingrained in how companies define and seek success as a result of growing demand from investors, customers, regulators, and civil society for companies to act responsibly (Khan et al., 2016; Organisation for Economic Co-operation and Development (OECD), 2022). The goal of this chapter is to examine the most significant and recent developments influencing the ESG environment. It looks at how companies are implementing cutting-edge ESG practices, incorporating sustainability measurements into performance reviews, and coordinating their activities with more general environmental and societal objectives. The study does this by identifying and analysing the theoretical underpinnings of these developments, such as the resource-based view of the firm (Barney, 1991; Hart & Dowell, 2011), legitimacy theory (Rao & Tilt, 2024; Suchman, 1995; Tilling & Tilt, 2010), institutional theory (DiMaggio & Powell, 1983; Wijethilake et al., 2017), and stakeholder theory (Freeman et al., 1984).