Evolutionary game of dynamic adjustment mechanisms in tripartite cooperation for ESG performance

This study examines the mechanisms of effective collaboration among governments, enterprises, and executives to achieve the dual goals of environmental conservation and economic growth within the framework of oversight of environmental, social, and governance (ESG) performance. A tripartite game-theoretic model is developed and a numerical simulation performed using MATLAB 2016a. The findings reveal that enterprises and executives may choose passive participation in environmental protection strategies or engage in free-riding behavior because of weak government supervision when the government's regulatory benefits are less than the subsidy costs, primarily because of insufficient government punishment. Conversely, positive participation is chosen when the incentives surpass the costs of active engagement in trade. This suggests an enhancement of government monitoring and evaluation mechanisms to guarantee the effective allocation of subsidies, coupled with substantive environmental actions by enterprises and executives would foster a strategic shift towards sustainable development, thereby improving the company's ESG performance.