Environmental, Social and Governance Frameworks in assessing Investment Risks and Opportunities: Perspectives from International Investors and the Thai Capital Markets
Keywords:
Sustainable Investing, Risk Assessment, Sustainability DisclosureAbstract
Although ESG literature in developed markets consistently affirms a positive correlation between ESG performance and organizational value, emerging markets, particularly Thailand, lack an analytical framework that integrates theoretical, empirical, and policy dimensions. This article therefore aims to develop and present an ESG Integration Maturity Framework to explain ESG integration in emerging markets, using literature synthesis and contextual analysis of the Thai capital market as a supporting basis. The research methodology employed a systematic literature review following the PRISMA approach from Scopus, Web of Science, and ScienceDirect databases from 2020–2025. The theoretical frameworks included Stakeholder Theory, RBV, Signaling Theory, and Institutional Theory.
The synthesis revealed that ESG disclosure reduces capital costs through mechanisms that reduce information asymmetry, but excess returns are lost after risk adjustment, suggesting that ESG may reflect qualitative factors more than free risk. Furthermore, the average ESG correlation score among six assessors was only 0.54, leading to aggregate confusion that hinders effective risk pricing. For Thailand, the SET ESG Ratings for 2025 projected 265 companies to meet the criteria, representing 70% of the market capitalization. However, the data certification system remains below the IAASB/ISAE 3000 standard, limiting the attraction of foreign ESG funding. This article presents an ESG Integration Maturity Framework based on Institutional Theory, RBV, and Systems Thinking as an organizational assessment tool for emerging markets.
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