Carroll (2016) [20] advocated that a company’s social responsibilities include economic, legal, ethical, and philanthropic responsibilities. Although the fourth category presented by each researcher differs in name, their connotations are similar. Each of the four components of responsibility is specific to different stakeholders, in terms of the different priorities that the stakeholder may be affected by.

Garriga and Melé (2004) [17] proposed instrumental theory to describe a company that perceives corporate social responsibility solely as a financial tool and values-related investments only in the context of improving its financial performance. This point of view originates from the agency theory, which upholds that companies take into account only the managers and shareholders within their organizations and consider profit creation to be the primary duty of their managers. Freeman (2010) [21] presented a more inclusive stakeholder theory, which emphasizes that stakeholders provide vital resources, or contributions, to a firm, which satisfy stakeholder demands. The salient argument behind stakeholder theory is that companies need to ensure their survival and continued success by satisfying stakeholder demands or else face severe criticism from their stakeholders [22].

Under instrumental theory, a company is responsible for satisfying shareholder needs; thus, it considers social responsibilities as operational goals and bases its operations on the expectations of its shareholders. Performing ESG activities to earn profits is a common method employed by companies [23]. Many past studies have shown that effective ESG practices can lead to strong financial performance [13,16] and high market value [11]. It has been proposed that ESG can have the following economic strategic objectives: maximizing shareholder value, which mostly centers on short-term performance gauged against market returns; achieving competitive advantages, in which long-term performance is measured by long-term profits; and cause-related marketing, in which companies promote good deeds and positive feedback to gain competitive advantage [17]. ESG can assist companies in creating substantial benefits, a view receiving more attention as competition grows more intense. Among many companies, the management of ESG activities has taken priority over other considerations [24]. Instrumental theory is the most widely applied theoretical basis in ESG research, perhaps because it emphasizes that the purpose of fulfilling ESG is to enhance a company’s competitive advantage and value-creating capacity with the ultimate goal of optimizing the interests of shareholders [25]; therefore, this study adopts shareholder interest maximization strategies as its theoretical basis.

Political theory emphasizes the social power of a company as a for-profit organization whose operations rely on more than just the principles of capitalism. In addition to having economic power, companies are able to demand that governments alter market regulations, which means they can influence politics. As a result, the general public forms expectations of these social entities. On account of this double power effect, interdependence exists between such companies and society [26], in which the latter has precise expectations regarding the proper behavior of the former. Furthermore, political theory holds that these companies exercise power responsibly and participate in social collaboration, which means that their operational strategies should promote environmental and social development of local communities.

Political theory can be further divided into corporate constitutionalism, integrative social contract theory, and corporate citizenship [27,28,29]. Stressing the relationship between social responsibility and social power, Lee (2011) [30] combines institutional and stakeholder theories to explain how companies choose their corporate social responsibility strategy. Companies that cannot bear their environmental and social responsibilities will inevitably lose their social power. Furthermore, companies can use their social power to protect their stakeholders from unreasonable organizational powers. This is referred to as corporate constitutionalism. Donaldson and Dunfee (1994) [31] observed that companies have social contracts, in which they offer customers, employees, and other members of society certain benefits in exchange for power. Donaldson and Dunfee (1999) [32] extended this viewpoint and developed the integrative social contracts theory, which holds that microsocial contracts established between companies and various economic communities contain consensual agreements that do not violate the universal rights defined by macrosocial contracts. Corporate citizenship originates from the fact that the survival and growth of companies rely on the social costs incurred by the general public. Thus, in addition to making a profit, companies are also obligated to play the part of good corporate citizen. As they offer value to society through their core operations, they must also pledge to uphold their obligations to society and act as a public role model in the practice of social ethics. Corporate citizenship involves a common voluntary operational strategy that operates within a specific scope [33]; thus, it is easy to measure for the purposes of this study.

Integrative theory indicates that companies are dependent on society, and for this reason, management practices should include identifying environmental issues with an emphasis on understanding and responding to different public interests [34], combining social value with corporate operation activities, and devising integrative management strategies. When corporate value systems are consistent with the surrounding social value system, the participating companies can gain legitimacy or prestige. In contrast, inconsistency between the two systems can pose substantial threats to a company’s legitimacy [17]. Thus, ESG is determined by the demands of the social value system at the time, and the perspective taken by a company’s environmental and social responsibilities should be converted into a perspective of public responsibility [35]. Integrative theory corresponds to the purpose of the normative stakeholder theory. Based on this theory, in addition to paying attention to shareholders, companies must also show concern for their employees, customers, communities, and the stakeholders. All stakeholders affected by the company should have the right to participate in corporate decisions, and the management should be responsible for serving the affected stakeholders [36]. Therefore, a company’s goal should be to protect the interests of all its stakeholders rather than just its shareholders. Their core concepts of integrative theory include the corporate social performance model presented by Wartick and Cochran (1985) [37], which integrates the principles and directive behavior of ESG and responds to social demands as well as to policy development involving social issues. Later, Wood (1991) [38] transformed the concepts of the corporate social performance model into three interrelated aspects: driving principles, behavioral processes, and significant efficacy. Wood’s study raises several issues worthy of reflection, such as how stakeholders might be identified, how the social demands of different stakeholders might be comprehended, how to manage the conflicts or potential conflicts that might occur among stakeholders, and finally, how society can determine whether a company’s performance meets social demands. In view of these reflections, integrative theory focuses on issues management, public responsibilities, stakeholders, and corporate social performance. For instance, Buysse and Verbeke (2003) [39] used the stakeholder perspective to explain that the green demands of stakeholders influence a company’s environmental strategies. Theories based on stakeholders are the most common, as it is commonly agreed that taking into account the interests of corporate stakeholders can benefit a company’s governance and promote its interests.

Ethical theory examines the relationship between companies and society from the perspective of moral values. Companies must be aware that all their actions to fulfill their ESG principles must comply with a code of ethics. Freeman (2010) [20] stated that due to moral principles, companies are not only responsible for the demands of society, but also for those of their legitimate stakeholders; they must satisfy the demands of certain groups in society (their stakeholders) rather than merely their shareholders. The normative stakeholder theory assumes that stakeholders have valid, normative claims on companies and that individuals or groups possess legitimate interests in the procedural and/or substantial aspects of corporate activities [25]. The stewardship theory has been proposed, emphasizing that managers should have a sense of mission with regard to morality and endeavor to do what is right. They should respond to their stakeholders according to ethical standards regardless of whether the results of the decision have adverse effects on a company’s financial performance [40]. The absolute demands on corporate behavior also include universal rights and sustainable development, concepts that are widely advocated on the international level. The social responsibility of universal rights is centered around human and labor rights. Although standards in this respect remain inconsistent, the Universal Declaration of Human Rights and the International Labour Organization Convention serve as the primary foundation. The Bruntland Report of 1987 is perhaps most representative of sustainable development in that it discusses the social responsibility of protecting the natural environment. Later, Elkington (2006) [41] again stressed the triple bottom line: while the single bottom line focuses on the management strategies involved in the financial aspects or economic benefits of a business, the triple bottom line encompasses the social aspects of maintaining and developing social and human capital and environmental factors, which involve complying with environmental laws and regulations and seeking means to utilize resources and process waste. Henriques and Sadorsky (1996) [42] measured the environmental ethics of companies, contending that they must implement the vision, policies, and projects designed by environmental protection agencies in order for companies to realize their environmental responsibilities.

There is some overlap among the four theories. They all indicate that when a company is aware of its environmental and social responsibilities, whether it is facing stakeholder demands or moral obligations, it is impelled to engage in related activities, one of which is environmental management. Menguc, Auh, and Ozanne (2010) [43] stated that even if environmental and social standards are not widely accepted as legal standards that regulate corporate behavior, corporate managers regard ESG practice as a crucial consideration when striving to achieve strong financial performance as it pertains to resource planning; therefore, this study applies these theoretical bases regarding ESG to the issue of environmental management in Taiwan as a means of exploring how environmental consciousness forms in companies and how such consciousness influences environmental management.