Abstract

Environmental, social, and governance (ESG) factors have become the center of investment decisions as they are a significant aspect of Business 4.0, enabled by the digital transformation of corporate environments. It is predicted that by 2025, more than half of the investors will use the ESG metrics to make an investment decision, following the research conducted before by Cherian and Seranmadevi, which showed that good performance on ESG factors is linked to an uplift of 15% on the long-term return on investment. However, this momentum of investors with ESG fails when it comes to the corporate uptake of ESG frameworks, where only 40% of firms fail to realize their ideal impact or practice. This disconnect puts businesses alive; poor ESG integration is linked to a 25% increase in the probability of receiving regulatory fines, as well as a 12% expected decline in stakeholder loyalty. It is traced from operational issues, disjointed IT structures, and the absence of reliable solutions or frameworks to address multifaceted ESG standards; firms risk falling foul of the regulations, for which regulatory authorities in the world currently penalize companies at an average of 14 million US dollars annually.