| Summary: | The objective of this research is to examine the impact of management control systems (MCS) on the adoption of Environmental, Social, and Governance (ESG) practices in organizational settings. Firms may enhance accountability and performance by including ESG criteria into MCS, therefore aligning with sustainable business practices. The study utilizes an extensive examination of current literature and previously collected data to investigate the correlation between MCS and ESG efficacy. The technique used in this study is grounded on a comprehensive assessment of relevant literature and a meticulous analysis of secondary data sources. Potential sources for information on MCS and ESG practices include peer-reviewed publications, industry reports, and case studies. The primary objective is to analyze and understand how MCS might be customized to align with ESG objectives, while also considering diverse industry practices and geographic areas. The finding suggest that firms with strong MCS adapted to ESG criteria display enhanced sustainable performance. The essential components are the incorporation of environmental, social, and governance (ESG) objectives into business plans, heightened openness achieved via ESG reporting, and the harmonization of employee incentives with sustainability goals. Moreover, the evidence indicates that industries with strict regulatory demands often had more advanced ESG-focused MCS, which is associated with superior ESG results. The research shows that the execution of ESG is significantly improved by the use of effective MCS. Organizations have to contemplate the revision of their control frameworks in order to clearly include environmental, social, and governance (ESG) elements, hence fostering improved compliance and performance results. Future research should concentrate on building quantitative models to quantify the influence of MCS on ESG performance, assisting in the empirical validation of the theoretical frameworks outlined above. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2025.
|
|---|