Integrating ESG Сriteria into Dynamic Methods for Performance Evaluation of Corporate Investment Projects

Abstract

The article highlights theoretical and practical aspects of integrating ESG criteria into dynamic methods for performance evaluation of corporate investment projects. Conceptualization of ESG (Environmental, Social, Governance) within the scope of investment project analysis reflects a shift of the fundamental paradigm from traditional shareholder value maximization toward a model of sustainable development and inclusive capitalism. In both academic and practical discourses, ESG criteria are viewed not as secondary ethical components, but as endogenous factors for risk assessment and long-term project viability. The integration of these non-financial indicators into the investment decision-making process enables the identification of latent vulnerabilities related to climate change, social shifts, and regulatory transformations. It is substantiated that traditional financial indicators, including net present value (NPV), internal rate of return (IRR), profitability index (PI), and discounted payback period (DPP), no longer provide a reasonably comprehensive evaluation in the context of sustainable development and responsible investment. A review of advanced theoretical approaches to incorporating environmental, social, and governance factors into investment analysis was made. The key limitations of classical dynamic evaluation methods related to insufficient consideration of long-term ESG risks, non-financial effects, and changes in the cost of capital were identified. A model of dynamic ESG discounting based on differentiated adjustment of the discount rate depending on the ESG sustainability level of a project is proposed. An approach to adjusting projected cash flows considering ESG-related risks and opportunities, as well as a system of ESG sensitivity indicators for NPV and IRR was developed. The practical significance of the research lies in improving the accuracy of long-term investment project evaluation and adapting financial analysis to the requirements of sustainable finance.