Conceptual Foundations of ESG Integration in Modern Business Models

Abstract

The ESG criteria have shifted decisively from the periphery of investment theory to the centre of corporate strategy, regulatory design, and academic inquiry. Yet the conceptual architecture underlying ESG integration remains imprecisely theorized. The framework is widely applied in practice, whereas its theoretical foundations remain subject to ongoing academic debate. This paper examines the intellectual underpinnings of ESG integration within modern business models, tracing its origins across stakeholder theory, institutional economics, and strategic management, while mapping the mechanisms through which ESG factors generate (or fail to generate) long-term enterprise value. Drawing on an integrative review of theoretical and empirical literature, this study articulates a multi-dimensional framework that distinguishes strategic, operational and reporting dimensions of ESG adoption. The study critically examines structural challenges including rating divergence, greenwashing, and the time-horizon mismatch between genuine sustainability transformation and the temporal logic of contemporary capital markets. It contributes a conceptually coherent account of ESG integration suited to the demands of contemporary scholarship and business practice alike. UDC: [005.35:502.131.1]:334.72; JEL: M14, G30, Q56, L21, K20