Mapping ESG compliance and sustainability pathways in multinational companies: a PC-Mahalanobis analysis

• We introduce a novel PC–Mahalanobis spatial tool to map ESG behavior over time • ESG transitions are shaped by technology shifts and rising geopolitical tensions • AI plays a dual role in ESG, boosting disclosure but raising ethical and bias risks • Aggregated ESG scores may conceal key differences in firm sustainability behavior • ESG-aligned firms and outliers form two or more stable but divergent strategic groups This paper investigates how multinational companies are navigating the evolving landscape of ESG (Environmental, Social, and Governance) compliance, in the context of new regulatory frameworks, technological disruption, and geopolitical concerns. Combining the theoretical approach with the empirical analysis, the paper explores the influence of Artificial Intelligence, how disclosure dynamics affect ESG reporting, and which transition costs derive from sustainability strategies. At the same time emphasizing how both current geopolitical turbulences and – to some extent – the rapid development of AI may represent a “decelerating” factor for ESG adoption. Building on a Principal Component–Mahalanobis framework, the empirical section maps ESG behaviour across a sample of multinational companies from 2015 to 2023, focusing not just on the quality of ESG conducts but also gauging their deviation from a statistical benchmark. The PCM-A identifies three latent dimensions of ESG activity - environmental footprint, compliance trade-offs, and the balance between financial performance and sustainability alignment - capturing over 85% of variance. By integrating Mahalanobis distance, our “spatial approach” reveals a varied set of trajectories: some firms exhibit consistent, benchmark-aligned behaviours, while others diverge significantly, and a few of them follow a stable but idiosyncratic path. These results reveal structural and strategic shortcomings underpinning the ESG framework and provide robust arguments for a reconsideration of aggregated ESG scores in favour of more transparent, disaggregated evaluation mechanisms, mostly focused on the Environmental component.