The Role of Internal Control in ESG Compliance

In the contemporary business landscape, the integration of Environmental, Social, and Governance (ESG) imperatives with corporate operations has emerged as a critical concern. This study addresses the pressing question of whether effective internal controls contribute to ensuring and sustaining corporate compliance with ESG standards. As stakeholders increasingly scrutinize ESG performance, failure to meet these expectations can result in severe repercussions. Drawing on an extensive literature review and empirical analysis, this research explores the intricate relationship between internal controls and ESG compliance. It seeks to explain how internal control mechanisms influence ESG outcomes and identify key mechanisms and best practices that organizations can adopt to enhance their internal control frameworks in support of ESG objectives. By providing actionable recommendations, this study aims to empower organizations to fortify their sustainability practices and mitigate associated risks in an era where ESG considerations are becoming more important.