Environmental, Social And Governance Issues Research Articles

The new CEPAR® model: a five-step methodology to tackle corporate ESG challenges

PurposeAddressing Environmental, Social and Governance (ESG) issues has become a critical aspect of business strategy. Since ESG has primarily focused on ratings and measures for reporting, there is a scarcity of methods to assist stakeholders in better comprehending corporate risk and addressing ESG-related issues and problems. The purpose of this paper is to propose a new model to narrow the critical gap.Design/methodology/approachThis study is based on several well-known structural frameworks for managing risks and projects in various industries. Two case studies on topics related to environment (E) and social (S) responsibility are used to demonstrate the practical implementation of the CEPAR® model.FindingsThe CEPAR® model, a trademarked five-step methodology (the Challenge-Evaluation-Planning-Action-Review model) was developed by the International Chamber of Sustainable Development (ICSD). The method and guidelines are outlined for easier appreciation by stakeholders of corporations to analyze ESG-related challenges and dilemmas, then able to make principled decisions, take actions, and review the outcomes. Each phase of the new model adheres to the theoretical and practical frameworks for problem-solving and decision-making, emphasizing the iterate process of addressing challenges, evaluating materiality, planning actions, taking actions, and reviewing the outcomes.Originality/valueThe new model is applicable for business corporations and organizations seeking to gain insight and tackle crucial ESG issues, ultimately improving their short- and long-term decision-making and business opportunities.

Gender of firm leadership and environmental, social and governance (ESG) reporting: evidence from banks listed on Ghana Stock Exchange

PurposeThis study aims to examine how woman corporate leadership indicators and environmental, social and governance (ESG) disclosure in listed banks on Ghana Stock Exchange are related.Design/methodology/approachData was obtained from the audited annual reports of the banks for the period 2006–2020. Empirical result estimation was achieved using Panel Corrected Standard Errors.FindingsThe result revealed that female chief executive officer (CEO), female board chairperson and board gender diversity are associated with higher disclosure of ESG issues in listed banks in Ghana in overall terms. However, in terms of individual disclosures, female board chairperson positively impacts social disclosure, whereas both female CEO and female board chairperson affect governance disclosure positively.Research limitations/implicationsIn this era of business where there is much emphasis on green business and investment by various stakeholders for purposes of ensuring business legitimacy, the result implies that banks must consider females to occupy the positions of CEO and board chairperson since that can help to improve ESG performance of banks.Practical implicationsIn this era of business where there is much emphasis on green business, socially responsible investment and impact investment by various stakeholders, the result implies that banks must consider improving the representation of women in leadership since that can help to improve ESG performance of banks and hence ability to attract more investors.Originality/valueTo the best of the authors’ knowledge, this is the first study to provide empirical evidence from a developing country perspective in Sub-Saharan Africa that gender of bank leadership has implications for ESG disclosure.

From greenwashing to ESG‐washing: A focus on the circular economy field

AbstractIn the field of Corporate Social Responsibility (CSR) today, Environmental, Social and Governance (ESG) factors play a fundamental and increasingly central role in the evaluation of corporate performance worldwide. The purpose of this paper is to investigate whether the recent phenomenon of ESG issues has given rise to a new form of greenwashing in a broad sense, not limited to the environmental sphere, but also extended to social and governance issues. The paper examines whether companies engaged in the transition to sustainable and in particular to circular models are actually focusing on concrete sustainable actions and less on distorted communication. Specifically, ESG performance measures were collected for 366 companies from the most impactful industries in different countries around the world to test the relationships between ESG performance, adoption of circular economy models and ‘washing’ practices related to stakeholder communication. As the transition to sustainable and circular models requires not only substantive action but also transparency, further research and efforts are needed to better understand the relationship between these elements in corporate behavior.

Can ESG disclosures promote firms going concern? Evidence from BRICS countries

AbstractThis study examines the moderating role of managerial ownership on environmental, social and governance (ESG) disclosures and the going concern of chemical manufacturing firms in Brazil, Russia, India, China, and South Africa (BRICS) countries. We employed a quantitative research methodology, using panel data from 236 listed firms operating in the chemical manufacturing sector between 2007 and 2022. For the analysis, we utilized the Augmented Mean Group and the Common Correlated Effects Mean Group estimators. The results showed that ESG disclosures significantly impact the continued existence of chemical manufacturing companies in BRICS nations. Additionally, high managerial ownership exerts a significant positive influence on the association between ESG disclosures and the going concern of chemical manufacturing firms. The findings affirm the need for businesses to disclose their ESG issues to stakeholders to ensure carbon neutrality goals for BRICS. Hence, it is recommended that policymakers and business owners promote and incentivize managerial ownership, recognizing its pivotal role in enhancing the positive relationship between ESG disclosure and firms' continuity, thereby contributing to the realization of carbon neutrality goals in the BRICS region.

Negative media coverage of ESG issues and corporate tax avoidance

PurposeThis study aims to investigate the role of negative media coverage of environmental, social and governance (ESG) issues in deterring tax avoidance. Inspired by media agenda-setting theory and legitimacy theory, this study hypothesises that an increase in ESG negative media coverage should cause a reputational drawback, leading companies to reduce tax avoidance to regain their legitimacy. Hence, this study examines a novel channel that links ESG and taxation.Design/methodology/approachThis study uses panel regression analysis to examine the relationship between negative media coverage of ESG issues and tax avoidance among the largest European entities. This study considers different measures of tax avoidance and negative media coverage.FindingsThe results show that negative media coverage of ESG issues is negatively associated with tax avoidance, suggesting that media can act as an external monitor for corporate taxation.Practical implicationsThe findings have implications for policymakers and regulators, which should consider tax transparency when dealing with ESG disclosure requirements. Tax disclosure should be integrated into ESG reporting.Social implicationsThe study has social implications related to the media, which act as watchdogs for firms’ irresponsible practices. According to this study’s findings, increased media pressure has the power to induce a better alignment between declared ESG policies and tax strategies.Originality/valueThis study contributes to the literature on the mechanisms that discourage tax avoidance and the literature on the relationship between ESG and taxation by shedding light on the role of media coverage.

ESG Integration into Venture Capital in the UK

Abstract Although ESG (Environmental, Social, and Governance) research on companies and investment portfolios is widespread, most of data and research is from established companies, driven by the increasing societal emphasis on sustainability and adherence to evolving compliance standards. However, there is a lack of ESG-focused studies on early-stage and venture capital. This study seeks to fill the gap in research on the ESG maturity of start-ups by surveying 225 start-ups in the portfolio of a UK-based venture capital, thereby providing a unique insight into the overall awareness of ESG among start-ups by presenting genuine samples. The findings provide implementation advice on optimal approaches to incorporate ESG issues into venture capital, and improve and leverage the dynamic between venture capital and start-ups to influence start-ups to adopt and comply with ESG integration. Keywords: ESG, Venture capital, Start-up, United Kingdom.

Managing Trade‐Offs Between Environmental, Social, Governance and Financial Sustainability in State‐Owned Enterprises: Insights from an Emerging Market

AbstractConcerns remain about how companies will reconcile environmental, social and governance (ESG) issues with their core mandates. This is one reason why many organisations did not initially subscribe to sustainable investing, reporting and accounting, especially where it is not mandatory, despite growing stakeholder pressure to do so. This paper examines how state‐owned enterprises (SOEs) with social and commercial mandates in South Africa, where sustainability reporting is mandatory, balance ESG practices and financial sustainability to fulfil their mandates. This article proposes and evaluates propositions about SOEs adopting and reporting ESG components using a survey questionnaire and semi‐structured interviews with important SOE stakeholders to show that its sustainability accounting approach benefits policy and non‐policy observers. More than half of the studied SOEs have embraced and disclosed their ESG practices, yet there appears to be no systematic way in which they balance ESG practices and financial sustainability, resulting in conflict. This paper appears to be the first SOE study on this topic. In this regard, this study offers novel insights into how sustainability practices may be incorporated into the social and commercial objectives of SOEs, which in most cases are conflicting, while still allowing SOEs to be financially sustainable and depend less on state bailouts, which is often the case, especially in Africa and in countries that face a high level of corruption. Considering the characteristics and mandates of SOEs, part of being socially responsible is utilising public resources in the form of taxpayers’ money in an efficient, effective and accountable manner. The discussion in this paper indicates that paying attention to ESG issues is part of a broader accountability mechanism expected from SOEs. Also, the choice of South Africa and of SOEs in South Africa has implications for theory and practice since SOEs in South Africa have social and commercial objectives such that they are expected to be agents of social responsibility.

Integrating sustainability in management control systems: an exploratory study on Italian banks

PurposeDrawing insights from institutional theory, this paper aims to examine whether and to what extent banks have reconfigured their management control systems (MCSs) in response to growing institutional pressures towards sustainability, understood as environmental, social and governance (ESG) issues.Design/methodology/approachThe authors conducted an exploratory study at the three largest Italian banking groups to shed light on changes made in MCSs to account for ESG issues. The analysis is based on 12 semi-structured interviews with managers from the sustainability and controls areas, as well as from other relevant operational areas particularly concerned with the integration process of ESG issues. Additionally, secondary data sources were used. The Malmi and Brown (2008) MCS framework, consisting of a package of five types of formal and informal control mechanisms, was used to structure and analyse the empirical data.FindingsThe examined banks widely implemented numerous changes to their MCSs as a response to the heightened sustainability pressures from regulatory bodies and stakeholders. In particular, with the exception of action planning, the results show an extensive integration of ESG issues into the five control mechanisms of Malmi and Brown’s framework, namely, long-term planning, cybernetic, reward/compensation, administrative and cultural controls.Practical implicationsBy identifying the approaches banks followed in reconfiguring traditional MCSs, this research sheds light on how adequate MCSs can promote banks’ “sustainable behaviours”. The results can, thus, contribute to defining best practices on how MCSs can be redesigned to support the integration of ESG issues into the banks’ way of doing business.Originality/valueOverall, the findings support the theoretical assertion that institutional pressures influence the design of banks’ MCSs, and that both formal and informal controls are necessary to ensure a real engagement towards sustainability. More specifically, this study reveals that MCSs, by encompassing both formal and informal controls, are central to enabling banks to appropriately understand, plan and control the transition towards business models fully oriented to the integration of ESG issues. Thereby, this allows banks to effectively respond to the increased stakeholder demands around ESG concerns.

Unveiling the Relationship Between ESG Scores and Firm Performance in India: A System GMM Approach

This paper investigates the impact of Environmental, Social and Governance (ESG) scores as well as individual pillar scores on the firm performance in the Indian context. Even though a lot of research has been conducted world-wide concerning this issue, a conclusive result has not yet been derived. Being an emerging economy, India is at a nascent stage of research related to ESG issues, and past research indicates a mixed result. In order to avoid the potential endogeneity issue, this paper used a dynamic panel approach of system GMM. This paper considered data from 59 non-financial companies listed under the NSE 500 index. Data was collected from the Thomson Reuters Refinitiv Eikon database over a period of 11, spanning from 2010 to 2021. The finding suggested a significantly negative impact of ESG score on firm performance measured by Tobin's Q and ROA, which indicates a non-linear U-shaped relationship. Net profit margin and closing price are used as alternative, dependent variables to check the robustness of the models and show consistent results. The environmental pillar score and social pillar score showed a negative impact on firm performance, whereas the governance pillar score showed a positive impact on market performance but negatively impacted financial performance. The key takeaway from this paper is that, if firms continue to improve ESG disclosure, it will positively impact firm performance in the future.

Towards a More Reliable ESG (Environmental, Social, and Governance) Assessment Framework: Lessons from the PRI Initiative

In recent years, green investments and ESG (Environmental, Social, and Governance) principles have gradually become the focus of the industry's attention. However, the future of ESG still has some uncertainties, and the diversity of ESG data and metrics has led to challenges in comparing ESG performance across companies, making it complex to determine the relevance and substantive ESG issues related to financial performance. This paper explores the evolution and challenges of ESG investments and proposes principles for ESG rating agencies to follow, originating from the PRI (Principles for Responsible Investment). This study recommends that rating agencies adopt a comprehensive assessment approach, considering a company's environmental, social, and governance performance and engaging with companies to obtain more comprehensive and reliable data. Additionally, rating agencies should maintain transparency, disclosing precise methods and data sources to enhance the credibility of ESG ratings. Most importantly, rating agencies must continuously improve their rating methodologies to reflect changes in the market and ESG practices, encouraging other rating agencies to adopt more consistent ESG assessment methods for a more sustainable investment practice and sustainable development in the financial industry.

Effect of board structure on stakeholders’ centric perspective of sustainable corporate world

Purpose Corporate leadership and environmental, social and governance (ESG) performance are closely intertwined, as effective corporate leadership can facilitate the achievement of strong ESG performance. Thus, the purpose of the study is to investigate the impact of corporate board leadership on the ESG performance of listed firms. Design/methodology/approach The sample has been taken from the listed firms of the Nifty 500 index spanning the period of 10 years from 2012 to 2022. Dynamic panel data estimations are applied through a fixed effect model. Findings The findings of this study revealed that board size, board independence and board qualification have a significant positive influence on ESG performance. It is evident that good corporate governance practices can positively influence ESG performance by fostering accountability, transparency and ethical behavior, as well as better integrating ESG considerations into their decision-making processes and ensuring that ESG issues are prioritized at the highest levels of management. Further findings also revealed that chief executive officer (CEO) duality has a significant negative relationship with ESG performance, which goes against the belief of stakeholder theory. Social implications It has practical implications for policymakers, as they can enact new regulations pertaining to the CEO’s position in the organizations to make corporate governance responsible for improved sustainability and ESG performance. Originality/value There are very few studies analyzing the impact of corporate board structure on ESG performance related to emerging markets. Thus, this study contributes to that literature by using the methodology GMM panel data for the first time as per our knowledge

ESG, Brand Trust and Brand Loyalty

The concept of ESG (Environmental, Social and Governance) has emerged as a key element of firm value. Its an important tool for companies to achieve sustainable development and improve their competitiveness. As a critical driver of sustainable development, companies have the responsibility to manage ESG well. Clarifying the benefits that ESG issues can bring to companies is a good way to encourage them to manage ESG. This paper aims to determine how firms ESG activities affect brand trust and brand loyalty to evaluate the benefits of firms ESG activities. Based on a sample of 169 online questionnaire, this study used SPSS to analyze the collected data and had the following results. First, it was discovered that brand trust and brand loyalty are positively impacted by all three ESG dimensions. Additionally, this study's findings showed that brand trust positively mediates the association between brand loyalty and ESG performance. According to the results of this work, firms ESG practices are not only satisfying the needs of sustainable development but also the needs of the enterprise itself. This study emphasizes the importance of ESG and provides practical implications for firms ESG activities.

Environmental, Social and Governance (ESG) disclosure and firm value of manufacturing firms: The moderating role of profitabilit

Purpose: This study examines the impact of environmental, social, and governance disclosure on firm value. This study empirically examines the impact of profitability on the relationship between ESG and firm value. Research methodology: This study uses a panel dataset of 12 industrial goods manufacturing firms listed during the 2014-2020 period. The direct effects were tested using an FEM and the Two-Stage Least Squares was used to account for the endogeneity problem. Results: This study finds a positive effect of ESG disclosures on firm value. The coefficients of ESG in the FEM and 2SLS results were not significant. The interaction between ROA and ESG also showed higher coefficients that were not statistically significant. The empirical analysis was robust to the use of two-stage least squares regression. Limitations: This study presents evidence from a single sector based on a prior literature review, which may affect the generalizability of the findings to other sectors. Contribution: This work adds to the broad ESG literature and methodologically extends past results by exploring the moderating influence of profitability. Practical implications: This study has implications for managers and firms that are increasingly desirous of improving their firm performance by presenting a positive image to their stakeholders and how this is linked to their profitability over time. Novelty: This study adds new aspects to the broad discussion on ESG and firm value in a developing-country context, which is consistent with the view that profitable firms mainly address ESG issues in such economies.

Breaking the ESG rating divergence: An open geospatial framework for environmental scores

Information about a company's environmental, social and governance (ESG) performance has become increasingly important in the decision-making process of financial institutions. The financial implications of environmental challenges (e.g. water stress), negative social impacts (e.g. health impacts in local communities) or poor corporate governance (e.g. breaching legislation) all continue to increase. Accordingly, there is a need for financial institutions to incorporate information on ESG risks, opportunities and impacts in decisions that relate to risk management, investments, credit, strategy, and reporting. ESG information is typically disseminated through ESG ratings, which combine the three constituents into a single rating, or ascribe them separate scores. The compilation of ESG ratings and the identification of appropriate data sources is an inherently complex process; as such, there is no single standard for data collection or reporting. This has led to a divergence in the underlying data sources used by different rating providers, as well as in the determination of factors that are deemed worthy of measurement in the first place. For example, when assessing a company's environmental impact, one rating provider may rely on company-provided data, while another may incorporate independent third-party assessments. Unfortunately, there is currently no clear mechanism for effectively resolving such disagreements to establish a standardised approach to ESG rating assessments. However, geospatial data and analyses offer several key advantages for ESG assessments, including consistency, the potential for enhanced accuracy, and the ability to identify and assess environmental impacts at a detailed physical asset level, in addition to evaluating the broader spatial context. By incorporating geospatial information (obtained through manually processing remotely sensed data, or by using existing products) rating methodologies can be improved, and disparities can be addressed more effectively. This would enable a more comprehensive understanding of the environmental considerations of ESG assessments, promoting a more informed and precise decision-making process. Within this context, a few institutions (e.g. the University of Oxford, the WWF, and a few others) are pioneering thought leadership around spatial finance, including the assessment of ESG issues utilising geospatial intelligence, but there are no consistent frameworks for incorporating geospatial data into ESG ratings and analysis. This paper explores the opportunity for such a geospatial environmental scoring framework, defining a variety of methods in which open data with broad geographic coverage could be incorporated into ESG analysis, generalisable to a range of assets and sectors. The proposed framework is organised into two categories: localised effects, which directly impact the immediate vicinity of an asset, and delocalised effects, which contribute to global climate change and atmospheric pollution. Sub-scores are defined within these categories, which capture both the localised effects on land use, biodiversity, soils, and hydrology, and the global impacts resulting from atmospheric emissions. The approaches for handling geospatial data to generate both these sub-scores and the final E-score are presented, including a test case, and the complete methodology is made available in open repositories.

Nexus between sustainability and financial performance in the Serbian banking sector


 Research Question: The paper investigates various ESG (Environmental, Social and Governance) related practices within the leading European banking groups (BGs) present in Serbian banking sector (SBS), including their financial performances. Motivation: The goal of the research was to explore approach habits to sustainable business between the leading European BGs present in the SBS. It should have in mind that SBS are in compliance with their headquarter/major shareholder. The rising global worry about ESG issues and its overall impact forces banking business model to use holistic approach, including the plug-in of sustainability and responsible behaviours. The paper draws on sustainable banking surveys of Aracil et al. (2021) and Stefanovic et al. (2021) in Business-Case domain, applying them on SBS with introduction of 3 comparable sustainable indicators (environmental loans, reduction of tCO2, community investments). It is the first study which takes in respect ESG elements of principal BGs in SBS, with the comprehensive analysis of subject’s legislative framework. Idea: The core idea of the paper was to empirically investigate the sustainable practice in SBS, based on different banks’ reports and publications, including disclosed ESG indicators. E-loans (EL) and profitability indicators were examined individually as dependent variables since other ESG and financial (solvency, financial stability and efficiency) variables served as independent ones. Data: Analysis was conducted using data of 4 European active BGs on SBS, in the period of 2015-2021, due to fact that there was the lack of quantitative metrics and non-uniform reporting practice. Tools: Statistical analysis (descriptive statistics, correlation, regression test utilizing ANOVA), were used to draw conclusions about the relationship variables, particularly correlation between ESG variables and profitability ratios. Findings: The study showed for analyzed BGs that: (1) they had unique ESG practice, based on global standards and EBA (European Banking Authority) regulation; (2) they had good credit risk management including E-risks in practice; (3) sustainability had significant inter-connectedness among ESG constituents, as well as with some of the financial metrics; (4) statistical significance of ESG metrics for EL; however similar findings are missing when it comes to association between financial performance (in terms of profitability) and ESG practice. Contribution: The paper introduces and expands existing research related to sustainable banking on SBS for further education of all stakeholders.

Investing in their best interests: considerations for trustees from the rise of ESG

Abstract The debate about whether a trustee’s fiduciary duties preclude or require consideration of environmental, social and governance (ESG) issues when making investments is rapidly evolving. The orthodox approach, that a trustee must pursue maximum profit to the exclusion of all other considerations, continues to face increasing pressure. A new generation of beneficiaries is increasingly pushing for investment strategies which respond to global pressures and trends (such as climate change-driven extreme weather events, biodiversity loss and inequality). Markets are increasingly taking account of the materiality of ESG considerations to financial value. Trustees following the orthodoxy now find themselves in an increasingly uncomfortable position as these pressures compete with their traditional duties and powers. Today, trustees must be cognisant of and regularly assess ESG issues and be seen to be doing so, failing which they may be exposed to business and reputational—and, increasingly, legal—risk.

Demystifying the relationship between ESG and SDG performance: Study of emerging economies

Companies and investors in emerging markets have started paying attention to ESG (Environmental, Social, and Governance) issues. There has been a growing demand for aligning ESG disclosure of companies to UN SDGs (United Nations Sustainable Development Goals), so understanding how the firm-level ESG affects the country-level SDG is very important for evaluating the advances in ESG and SDG implementation in emerging markets. This study examines the linkage between firm-level ESG disclosures and their relationship with country-level SDG scores over ten years for three emerging countries: India, China, and Brazil. The analysis of 1,500 top-listed firms in these countries reveals an increasing trend of firms going for ESG disclosures and increased ESG scores over the years in the three markets. Out of the total sample, almost 75% of firms make ESG disclosures in Brazil, followed by 54% in India and 32% in China. Additionally, companies in all these countries tend to emphasize governance-related disclosures more, with Brazil having higher ESG disclosures than India and China. The correlation and causality tests indicate a significant positive correlation between mean ESG scores and country-specific SDG scores. The Dumitrescu-Hurlin panel causality tests provide stronger linkages between firm-specific Environment scores and SDG scores, indicating that a firm’s environment disclosures translate into higher SDG scores. However, the same is not valid for Social and Governance factors. These findings have important implications given the global attention on the linkages between ESG disclosure and SDG score. AcknowledgmentsThe financial and infrastructure support provided by FORE School of Management, New Delhi in completing this paper is gratefully acknowledged.

Managerial Future of the Artificial Intelligence

The developed concept for Artificial Intelligence (AI) introduction to the management system is concerned with a range of ethical, social, environmental and legal issues. Management system as a form of organising chaos and complexity becomes the only platform to design business and to make it sustainable irrespective of location and personalities engaged. At the time of the world economy demand for social actors, activism in the necessary transition of management oriented to reach the Sustainable Development Goals (SDG) is a crucial factor to form the new management digitized system. Environmental, Social and Governance (ESG) Investing managed assets as a part of all corporate assets. ESG initiative was a proposal of the UN to promote principles for a sustainable economy. Companies with better ESG performance can increase shareholders’ value by managing risks related to emerging ESG issues, namely bring the corporation to have energy transition experience. Different approaches of millennials to managing enterprises show their higher interest than that of predecessors to introduce ESG standards and tasks to the day-to-day management. Millennials are more interested in social values than in the investment return. Even the future of investments is dependent on the basic idea that investors are not short-termist but tend to be loyal to a project about which they have more relevant information. So, they may support new AI-based management in the case it becomes an efficient platform to design a human-oriented enterprise. This study aims at showing what the relationship of the management structure and process should be in order to manage the AI progress. Understanding of management content and work with the AI representation is of strategic importance.

The impact of managerial myopia on environmental, social and governance (ESG) engagement: Evidence from Chinese firms

Managers are central to corporate decision-making and face the challenge of balancing short-term market pressures with long-term value creation, including environmental, social, and governance (ESG) issues. However, little is known about the effects of managerial myopia on firms' adoption of long-term oriented ESG strategies. Exploiting variation from differential managerial myopia of Chinese firms over 2008–2019, this study examines the impact of managerial myopia on ESG engagement. The results show that the adoption of ESG engagement is significantly reduced by managerial myopia, with a one standard deviation increase leading to a 7% decrease in the probability of ESG engagement which is potentially large. Our results also show supporting evidence for two promising mechanisms, i.e., public exposure and innovation, through which managerial myopia negatively affects ESG engagement. Furthermore, the study finds that the ESG strategy of firms positively influcences the holdings of investors with longer horizons, providing a financial incentive for firms to engage in ESG issues. These findings can help managers implement long-term strategies that balance short-term market pressures with long-term value creation, including environmental improvement.

Exploring the Suitability of Arbitration for Settling ESG and Human Rights Disputes

Environmental, Social and Governance (ESG) and Human Rights (HR) have become two of the most widely discussed topics in the last few years for businesses and law firms alike, but to what extent can ESG and HR issues be resolved through arbitration? This article examines the ESG and HR obligations that currently exist for companies, and analyses their gradual shift from soft law to binding hard law obligations. The rising number of ESG and HR related hard law obligations, paired with the increasing commercial awareness of the importance of ESG and HR, naturally leads to a greater potential for disputes. This article explores to what extent arbitration may be an appropriate dispute resolution method for these claims. In particular, it recognizes that although limitations to arbitration (such as in transparency and third party participation) exist, amendments have already been made to institutional rules to better position arbitration towards handling ESG and HR disputes. With the continuation of this trend, it is expected that arbitration will be more commonly used to resolve ESG and HR disputes. ESG, Environmental, Social, Governance, Human Rights, Dispute, Arbitration, ADR, Climate Change, Sustainability