ESG Compliance to Investor Wealth Creation A Conceptual Model for Sustainable Financial Performance

This paper provides a new conceptual framework that re-examines how Environmental, Social, and Governance practices translate into real corporate performance and investor wealth creation. By integrating Stakeholder Theory, the Resource-Based View, Agency Theory, and Institutional Theory, we move past basic compliance-driven assumptions to show that sustainability initiatives only build sustained investor wealth when they are deeply embedded within the firm's core operational strategy. Our model highlights the destructive role of ESG Decoupling, demonstrating how symbolic disclosures and greenwashing create structural risks that can damage corporate reputation and destroy shareholder value. By establishing clear mediating paths through capital allocation efficiency and corporate reputation, and introducing critical boundary conditions via macroeconomic uncertainty and industry materiality, this framework helps resolve historical contradictions in the sustainable finance literature. Ultimately, this model offers a clear roadmap for future empirical research and provides corporate leaders, asset managers, and market regulators with an actionable framework for navigating the post-compliance financial landscape.

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