THE EVOLUTION OF ESG: TRENDS, CHALLENGES, AND FUTURE DIRECTIONS

The current study investigates the evolution of Environmental, Social, and Governance (ESG) practices and their impact on corporate sustainability and investor behavior, with special emphasis on the increasing weight being given to ESG factors in developing corporate strategies and investment decisions. Businesses and investors have become concerned about ESG procedures, giving increasing scrutiny to companies' management of environmental risks, social issues, and governance practices. Under the quantitative method, data are collected via a structured questionnaire for 400 respondents selected from listed Indian companies in Pune. The data collected were then analyzed using ANOVA and regression analysis to assess the relationship between ESG adoption and corporate sustainability and investor behavior while also analyzing the variability of ESG ratings among different providers.
The study results indicate that long-term adoption of ESG positively influenced corporate sustainability and investor behavior while also yielding an assertion from respondents that ESG practices contribute to financial performance, reputation, and investor loyalty. It also argues that the significant difference in ESG ratings between various agencies is hindering investors in making rational decisions into ESG. Such a lack of standardization needs to be overcome to attain consistency and reliability of ESG measures and reporting frameworks.
Looking at the conclusion, the study argues for ESG to figure prominently in corporate strategy and investment decisions, as the practice truly contributes to long-term value creation and the sustainable growth of firms. While standardization in ESG reporting must be adopted by firms, investors need to invest time and effort into identifying ESG performance measurement tools out there that will evaluate ESG performance from different providers. The next research should focus on improving ESG metrics and assessing the opportunities of newly emerging tech on the ESG front in assessment and reporting.