INSTITUTIONAL AND RESOURCE CONSTRAINTS ON THE INTEGRATION OF THE SUSTAINABLE DEVELOPMENT GOALS INTO THE ACTIVITIES OF BUSINESS ENTITIES

Abstract

The paper systematises and interprets the institutional and resource constraints affecting the integration of the Sustainable Development Goals (SDGs) into the strategic and operational decision-making of real-sector business entities in Ukraine under conditions of economic transformation. It argues that SDG integration is increasingly shifting from a voluntary corporate social responsibility practice toward a core element of strategic management encompassing environmental, social, and governance (ESG) dimensions. Key institutional constraints are identified, including the instability and fragmentation of the regulatory framework for sustainable development, the lack of a coherent state policy for embedding ESG principles in the real sector, and insufficient alignment with European non-financial reporting standards. These deficiencies heighten regulatory uncertainty, increase transaction costs for firms operating in international value chains, and impede the formation of a unified sustainability governance system. The analysis shows that weak economic incentives and an underdeveloped sustainable finance infrastructure significantly limit access to long-term capital for environmental, social, and innovation projects. Capacity-related barriers are also highlighted, notably deficits in managerial competencies, shortages of specialists in non-financial reporting and ESG risk assessment, and inadequate structured data for integrating SDGs into business processes.

The interaction of institutional and resource constraints forms a persistent “vicious circle” that suppresses investment activity and hinders the systematic incorporation of SDGs into strategic management.  The paper outlines conceptual directions for transitioning from fragmented ESG initiatives to the systematic integration of the SDGs through coordinated institutional, resource-based, and organisational measures adapted to the specific conditions of the Ukrainian economy.