From Theory to Practice: ESG Integration in Corporate Governance and Financial Decision-Making
Prof. Bhaskar M G
Industrial and Engineering Management
R. V. College of Engineering Bengaluru, Karnataka, India
bhaskarmg@rvce.edu.in
Gagana M V
Computer Science and Engineering
R. V. College of Engineering Bengaluru, Karnataka, India gaganamv.cs22@rvce.edu.in
Goutami Sooda
Computer Science and Engineering
R. V. College of Engineering Bengaluru, Karnataka, India
goutamisooda.cs22@rvce.edu.in
Mitesh Murthy
Computer Science and Engineering
R. V. College of Engineering Bengaluru, Karnataka, India
miteshmurthy.cs22@rvce.edu.in
Ganesh N Naik
Computer Science and Engineering
R. V. College of Engineering Bengaluru, Karnataka, India
ganeshnnaik.cs22@rvce.edu.in
Abstract—The rising prominence of Environmental, Social, and Governance (ESG) factors in corporate strategy and finan- cial decision-making reflects evolving stakeholder expectations and regulatory demands, both globally and within India. This paper explores the theoretical foundations underpinning ESG integration—drawing on stakeholder theory, agency theory, and complementary frameworks—and their relevance to corporate governance and financial management. ESG considerations are increasingly influencing capital allocation, investment appraisal, and risk management practices, offering both a performance- enhancing and risk-mitigating lens for long-term value creation. The paper also examines ESG reporting standards, governance mechanisms, and the evolving Indian regulatory landscape, including the Business Responsibility and Sustainability Report (BRSR) mandate. Despite challenges such as standardization gaps and greenwashing risks, ESG remains central to sustainable financial performance. The study concludes by highlighting key implementation issues, critiques, and future research directions, particularly the need for improved measurement and deeper analysis within emerging market contexts like India.
Keywords: ESG (Environmental, Social, and Governance), Corporate Governance, Stakeholder Theory, Agency The- ory, Sustainable Finance, Investment Decision-making, Risk Management, ESG Reporting Frameworks, Indian Corporate Regulation, Financial Management, Business Responsibility and Sustainability Report (BRSR), Greenwashing, Long-term Value Creation, Cost of Capital, Emerging Markets.
