Corporate ESG Policy Implementation and Disclosure Strategies: Understanding the Choice of Climate Policies and Practices

Abstract

We are living in an era of transitions. One of the most significant among them is the green transition, whose impacts reach across society, business, and institutions. The effects of climate change caused by human activity pose a threat to future generations, challenging people to change established ways of operating and to seek new solutions to replace them. In the business world, this requires solutions that maintain competitiveness. The ability to identify opportunities, seize them at the right time, and reconfigure assets and resources are the cornerstones of transformation. Strategic, administrative, technological, and financial dynamism and flexibility are key factors as companies strive to adopt new practices. The foundation of capabilities lies not only in organizational structure, stakeholder capital, and path dependency, but also in human capital, namely, the skills of leadership and employees as well as collaborative competencies. Foresight, the ability to recognize windows of opportunity, and timely action make it possible to operate in alignment with current trends. Still, it is important to recognize that the green transition is heavily guided by institutions. Various policies steer corporate behavior, whether they are mandatory or voluntary operational frameworks. The key question, then, is: What factors drive companies to adopt certain policies as part of their operations? This study seeks to answer that question by building a theoretical framework grounded in internal corporate capabilities, especially dynamic capabilities since change is at the core of the subject. In addition, attention is paid to external pressures faced by companies in the form of stakeholder expectations and political mandates. The findings of the study lead to outcomes that are strategically, and managerially significant. Relying on qualitative data, the research supports companies in leveraging their existing capabilities in the face of uncertainty and continuously developing them to become more adaptive and aligned with current trends. It also addresses gaps identified in previous studies and contributes to advancing research in support of the green transition.