The Evolving Landscape of Corporate Social Responsibility: The Shift Towards ESG (Environmental, Social, and Governance) Compliance

Abstract

Corporate Social Responsibility (CSR) has long served as a mechanism for businesses to demonstrate goodwill, but its voluntary nature has proven insufficient in addressing modern corporate challenges such as environmental degradation, social inequities, and governance failures like insider trading. This paper explores the transformative shift from CSR to Environmental, Social, and Governance (ESG) compliance, a structured and enforceable framework that integrates measurable standards into corporate strategies. Using a doctrinal and comparative research design, the study traces the evolution of CSR into ESG, analyzing its role in mitigating systemic risks and enhancing accountability. The analysis spans global trends and India’s regulatory landscape, incorporating case studies like Volkswagen’s emissions scandal and TATA Group’s sustainability success. Findings reveal that ESG outperforms CSR in enforceability and stakeholder trust, though challenges such as greenwashing, metric ambiguity, and compliance costs persist. The paper offers legal and policy recommendations, including mandatory ESG audits and international standard convergence, to strengthen its implementation. It concludes by emphasizing ESG’s potential to reduce financial crimes and calls for future research into its technological and legal integration, particularly through AI and blockchain innovations.