An integrated theory of the firm approach to environmental, social and governance performance

The literature seeking to explain why firms conduct environmental, social and governance (ESG) activity is substantial and growing but remains underdeveloped. This paper offers a holistic and multi-disciplinary theoretical framework to situate ESG activity as integral to firm performance. Drawing on established theories of the firm, these theories together assist the firm identify salient stakeholders, and how their contributions and claims may be integrated into firm activity. This approach places ESG considerations as an important element of firm activity in terms of developing and maintaining a firm's social licence, the way it manages risks, and building competitive advantage.

Automated summary

This paper proposes a comprehensive theoretical framework that positions ESG activities at the core of firm performance. By helping the firm identify key stakeholders and integrating their contributions and demands, it emphasizes the importance of ESG activities for a firm's social license, risk management, and competitive advantage.