Role of Artificial Intelligence in Sustainable Development: The Strategic Place of AI and ESG Integration in Corporate Governance

This paper investigates how the intersection of artificial intelligence (AI) and Environmental, Social, and Governance (ESG) models in corporate strategy is evolving and how it can support sustainable development and responsible governance. The study, based on a mixed-methods design with a longitudinal quantitative analysis of 600 publicly traded companies over 3 years and in-depth, unstructured qualitative interviews, explores the relationship between AI adoption and ESG performance, accounting for industry- and region-specific inclusive factors. Quantitative findings indicate that AI investments and ESG scores have a positive, statistically significant relationship, and that industry influences on AI investments are significantly stronger in industries with high AI intensity, such as technology. Qualitative responses indicate that AI helps monitor the environment in real time, engage stakeholders, and uphold ethical standards, thereby changing routine organisational processes and decision-making. The paper advances the resource-based view, the stakeholder theory, and the socio-technical systems theory to describe AI's strategic position as a distinctive, valuable asset and to enhance corporate sustainability competence. It outlines key ethical and governance issues associated with AI, emphasizing the need for well constituted oversight mechanisms. The study's real-world application for managers, policymakers, and investors is that there must be clear AI standardization, enforceable governance, and the incorporation of AI-led ESG indicators. Given the limitations of the existing empirical literature, the study proposes prospective longitudinal and quasi-experimental studies to determine causality and external validity. On the whole, the results demonstrate the strategic prospects of AI as a driver of sustainable business conduct, calling for a responsible, moral, and people-oriented approach to technological innovation in line with social values.