The impact of Environmental, Social and Governance (ESG) factors on corporate decision-making

Sustainable and responsible business practices have remarkable positive financial and operational spin-offs on organizations. Environmental, Social, and Governance practices determine the extent to which orgasations realise their core strategies. This research was aimed at integrating scholarly works pertaining to ESG variables to comprehend the extent to which the variables shape corporate decision-making processes. The study also sought to evaluate the extent to which the ESG variables impact the management of risk of organisations, reputation, and capital accessibility. Also, the study was aimed at assessing the difficulties organisations face when incorporating ESG variables into their decisions-making processes. To achieve the objectives, the research employed a mixed methodology where qualitative and quantitative approaches were utilized in the collection of data. The qualitative component included semi-structured interviews with industry professionals and the quantitative component included administration of surveys to professionals in the field. The thematic analysis and inferential statistics of the data indicated that there is a strong positive correlation between ESG variables and the financial performance of companies included in the study. Also, results indicated that sustainable practices result in an increase in the value of stocks of respectable companies. The results indicated that company reputation and brand image are positively correlated to their incorporation of ESG variables in their operations. The study recommends adaptability of organizations’ management to ESG practices to enhance performance and boost brand reputation.