Improving Corporate Performance through Stakeholder-Based ESG Practices

Abstract

In the context of escalating concerns over environmental issues and global warming, consumers and investors increasingly prioritize corporate sustainability and social responsibility. To bolster corporate image and competitiveness, many companies integrate Environmental, Social, and Governance (ESG) principles into their strategic frameworks. While existing research has established a positive link between robust ESG practices and improved financial performance—attributed to factors such as enhanced reputation, cost reduction, and effective risk management—the precise mechanisms of this relationship remain unclear. This study aims to enhance understanding by exploring how ESG considerations impact stakeholders and influence corporate performance. Empirical evidence underscores that commendable ESG performance yields favorable outcomes for all key stakeholders. Simultaneously, the research examines the reciprocal relationship where executive behavior significantly influences ESG ratings. Through this investigation, it aims to provide additional insights into the intricate interplay between ESG, stakeholders, and corporate performance, contributing to a nuanced comprehension of this crucial nexus.