Research on the Incentives and Restraints of Governmental Policies on Corporate ESG Performance

The emergence of ESG (Environmental, Social, and Governance) represents an application of Sustainable Development Goal (SDG) in the realm of business, which can motivate companies to integrate their economic profits with social responsibilities. In the process of implementing ESG principles, government macroeconomic regulation plays a significant role. This essay will pay attention to the influence of public policies made by governments, including incentive policies and regulatory policies, on corporate ESG decisions and performance with the method of qualitative research. It can be concluded that these two policy types can respectively guide or regulate environmental, social, and governance behaviors, and that the integration of incentive and regulatory policies can create a framework enabling companies to holistically enhance their ESG performance through a combination of internal motivation and external oversight.