The Practical Significance of ESG in Economically Underdeveloped Areas: A Case Study of Lincang City in China and Nairobi City in Kenya

Abstract

This study explores the practical significance of Environmental, Social, and Governance (ESG) frameworks in economically underdeveloped regions through case studies of Lincang City in China and Nairobi City in Kenya. While global ESG adoption continues to expand, its localized impacts in lower-income contexts remain understudied. Drawing upon Institutional, Resource Dependency, and Stakeholder theories, this mixed-method research combines qualitative corporate case analyses with regional quantitative indicators from 2020 to 2024. Findings indicate diverse ESG trajectories: Lincang's ESG strategy supports structural transition toward services and ecological agriculture, whereas Nairobi focuses on consolidating sustainable finance and social inclusion within its established service economy. Corporate-level analysis highlights varying ESG effects on profitability and strategic orientation, contrasting short-term compliance-driven financial benefits with long-term social-investment returns. Significant implementation barriers identified include fragmented regulations, insufficient financing channels, and limited stakeholder awareness. The study underscores the necessity of customized ESG approaches aligned with local institutional contexts and economic structures, providing targeted policy recommendations to enhance sustainable development in similar regions.