Environmental, Social, and Governance (ESG) Integration as a Driver of Corporate Financial Sustainability: A Conceptual Synthesis

Abstract

This paper develops a conceptual framework to understand how integrating Environmental, Social, and Governance (ESG) dimensions drives corporate financial sustainability (CFS). Despite a voluminous empirical literature, the field remains fragmented by inconsistent construct definitions, theoretical eclecticism, and methodological shortcomings that collectively obscure the mechanisms underlying the relationship between ESG and CFS. This study addresses this theoretical deficit. A conceptual synthesis was conducted based on 100 peer-reviewed articles retrieved from Scopus (2015–2025), following a structured PRISMA-informed filtering process across Business, Management and Accounting, and Economics, Econometrics and Finance subject areas. The literature was critically appraised for theoretical coherence, construct validity, and explanatory adequacy. The paper proposes a three-tiered conceptual framework that positions ESG integration dimensions (Environmental, Social, and Governance) as independent constructs, ESG Risk Management and Sustainability Reporting Quality as mediating mechanisms, and CFS as the dependent outcome. Board Oversight Quality and Regulatory & Institutional Pressure are posited as boundary-setting moderators. Seven formal propositions are advanced. The framework is theoretical and has not been empirically validated. Its generalisability is bounded by contextual factors, including market maturity, regulatory environment, and industry sector. The Scopus corpus, while rigorous, may under-represent grey literature, practitioner-driven insights, and regional perspectives from under-researched contexts such as Sub-Saharan Africa and the Middle East. The framework provides corporate boards, sustainability officers, and institutional investors with a theoretically grounded map for strategically embedding ESG into financial planning, risk governance, and disclosure practices. This paper makes a distinctive contribution by critically interrogating the theoretical fragmentation of the ESG–CFS literature, integrating agency, stakeholder, legitimacy, and resource-based perspectives into a unified explanatory architecture, and advancing testable propositions that address identified construct ambiguity.