Implementing ESG in Organizations: Factors Affecting The Adoption

There is emerging evidence in literature showing the importance of embracing the environment, social and governance (ESG) principles as resulting in positive accretive value to an enterprise. The increasing impact of stakeholder theory has driven many organizations around the globe towards embracing ESG principles and there has been increased attention paid to this phenomenon in recent years with many engaging consultants in policy work and providing advisory services at execution phase. This was not always so. ESG principles dates back many decades but few organizations embraced these principles. Few empirical studies have provided a link between embracing of ESG principles and organizational behaviors. There is limited available literature about empirical studies that investigated how decision making about adopting ESG principles is influenced by the organization behaviors and what these factors might be. In this study, we addressed this gap by conducting a qualitative inquiry using semi-structured interviews of thirty respondents consisting of board directors and corporate management in variety of settings in Nigeria, USA and the UK. The research focused on the personal lived experiences of this select thirty leaders - highlighting the roles they play, the difficulties they encounter and the contributions they make in decision making related to embracing ESG principles in their organization. Informed by the upper echelons theory and resource-based view of the firm, we found that leadership authority is the dominant factor driving the embrace and implementation of ESG principles as leaders are able to exert influence in the process of allocation of organizational resources to achieve desired outcome. Additionally, we identified other factors such as costs, regulation, reputation etc. that the consulting community could include as part of their toolkit as they seek to aid their clients desire to embed ESG related policy actions in their organizations. Lastly the study found ESG perceptions varies by country indicating that one hat may not fit all in the conduct of their engagement. ESG topic is too broad in general, so we focused mostly on the social aspect. Key Words: ESG, stakeholder theory, corporate governance, change, organizational behaviors, decision making, upper echelons theory, resource-based view .