ESG Practices and Corporate Governance: Contemporary Perspectives, Challenges, and Implications for Sustainable Business Performance
Keywords:
ESG practices, corporate governance, sustainability reporting, sustainable business performanceAbstract
This review article examines the relationship between ESG practices and corporate governance, with emphasis on contemporary perspectives, implementation challenges, and implications for sustainable business performance. The article adopts a conceptual and literature-based review approach. It synthesizes recent research on ESG disclosure, corporate governance mechanisms, sustainability reporting, ESG ratings, greenwashing, and firm performance. The review is organized around conceptual foundations, theoretical perspectives, governance mechanisms, implementation barriers, performance implications, and future research directions. The review shows that ESG has shifted from a peripheral corporate social responsibility activity to a strategic governance concern. Corporate governance acts not only as one component of ESG but also as the institutional mechanism through which environmental and social objectives are implemented, monitored, and disclosed. Board oversight, diversity, audit quality, assurance, executive incentives, and shareholder engagement strengthen ESG accountability. However, ESG implementation remains constrained by inconsistent ratings, weak standardization, greenwashing, poor data quality, limited assurance, regulatory fragmentation, and short-term financial pressures. The article suggests that managers, boards, regulators, and investors should treat ESG as a strategic and governance-driven process rather than a symbolic reporting exercise. Strong governance can improve ESG credibility, stakeholder trust, risk management, and long-term value creation. The review contributes by integrating ESG and corporate governance literature into a coherent framework for understanding sustainable business performance.
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