AUTHOR: Tsolmon Mashlai, Altan-Od Mandakh
PUBLISHED IN: Volume 6 Issue 2
KEYWORDS:Environmental, Social, and Governance, Stakeholder Capitalism, Corporate Governance, Profit Maximization, Sustainable Business Strategy, Triple Bottom Line, Regulatory Policy, Emerging Markets, Climate Disclosure, Ethical Investment, Sustainable Finance, Corporate Purpose, Global ESG Standards
ABSTRACT
The rise of Environmental, Social, and Governance (ESG) principles marks a fundamental shift in how firms and policymakers understand value creation. This conceptual research paper explores how ESG is challenging the traditional economic logic of profit maximization, specifically the classical model where firms optimize output at the point where marginal revenue equals marginal cost (MR = MC). Tracing ESG’s evolution from early roots in corporate social responsibility and stakeholder theory, the study analyzes its growing influence on corporate governance, strategic management, and regulatory design. Each ESG pillar is examined in depth, with comparative insights from both developed (e.g., the United States, European Union) and emerging economies (e.g., India, Brazil, China, and African markets). The analysis reveals a global transformation: firms are increasingly integrating sustainability into core operations, addressing environmental and social externalities, and adopting governance models that reflect stakeholder interests. Key trends, such as net-zero commitments, diversity mandates, and mandatory sustainability disclosures, underscore ESG’s institutionalization across sectors and regions. While implementation challenges remain, including standard fragmentation and political resistance, the ESG imperative signals a departure from narrow shareholder primacy toward a broader, purpose-driven model of capitalism. This paper offers a comprehensive synthesis of how ESG is reshaping the logic of profit, strategy, and policy in the 21st century.
DOI: https://doi.org/10.65194/IJBI-2026-1008
