IMPLEMENTATION OF ESG AND CORPORATE SOCIAL RESPONSIBILITY IN THE CONTEXT OF THE CIRCULAR ECONOMY: MONITORING EFFECTIVENESS AND TRANSPARENCY CHALLENGES

Abstract

The article examines the principal challenges companies face in implementing Environmental, Social, and Governance (ESG) practices, the circular economy, and Corporate Social Responsibility (CSR). It addresses issues concerning the monitoring and assessment of ESG practices’ effectiveness, transparency concerns in ESG reporting, and the economic feasibility of transitioning to circular economic models. The study highlights how CSR, increasingly integral to modern business, supports the UN’s Sustainable Development Goals (SDGs) by promoting environmental and social accountability. Alongside CSR, ESG practices provide a structured framework for companies to contribute to sustainable development. For meaningful progress toward SDGs, companies must consider social and environmental impacts beyond financial gains. However, challenges, including transparency in ESG reporting and the risk of ESG mimicry, where companies create a facade of responsibility without substantive changes, persist. Reliable monitoring methods and transparent assessments are necessary to prevent ESG mimicry and ensure impactful corporate accountability. The analysis draws from recent studies which define CSR as ethical responsibility, enhancing corporate reputation, and emphasize ESG’s role in fostering business resilience in post-pandemic contexts. Other recent research proposes circular economy integration as a pathway to sustainability within the context of EU integration. The article discusses the synergy between the public sector, businesses, and civil society, essential for effectively implementing CSR and ESG initiatives. It underscores the importance of developing standards to improve ESG reporting transparency, addressing informational asymmetry, and ensuring adherence to sustainable principles.