Environmental, Social, and Governance (ESG) Adoption in Firms Operating in Palestine: A Policy and Practice Analysis in a Fragile and Constrained Economy
Keywords:
ESG, Corporate Governance, Sustainability Policy, Fragile EconomiesAbstract
Environmental, Social, and Governance (ESG) principles have become a central component of global corporate governance, investment decision-making, and regulatory reform. However, the applicability and effectiveness of ESG frameworks in fragile and conflict-affected economies remain insufficiently examined. This policy and practice analysis investigates ESG adoption among firms operating in Palestine, focusing on the alignment between formal ESG-related policies and actual organizational practices. Drawing on institutional theory, stakeholder theory, and the resource-based view, the paper evaluates how political instability, regulatory fragmentation, economic constraints, and limited enforcement capacity shape ESG implementation in the Palestinian context. The analysis demonstrates that ESG adoption is predominantly policy-driven and externally induced, reflecting pressures from international donors, development finance institutions, and correspondent banking relationships rather than domestic regulatory mandates. While ESG-related policies and commitments are increasingly visible, substantive implementation remains uneven, particularly with respect to environmental management systems and governance structures. In contrast, the social dimension of ESG is more deeply embedded in organizational practice, reflecting Palestine’s socio-economic realities and stakeholder priorities. The paper identifies critical policy–practice gaps, including symbolic compliance, weak disclosure regimes, limited board-level accountability, and insufficient organizational capacity. It concludes with context-sensitive policy and managerial recommendations aimed at regulators, firms, financial institutions, and development partners. By situating ESG adoption within the realities of a constrained and fragile economy, this study contributes policy-relevant insights to the broader ESG governance literature beyond advanced and emerging market settings.
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