ESG Frameworks and Technology Policy: A Critical Review of Innovation Governance in Emerging Economies

Abstract

Environmental, social and governance (ESG) frameworks and technology policy are theorized in different streams of literature, and there is no one coordinating these elements, despite their acting on the same firms in emerging economies. This critical review looks at their interface, and unpleasantly proposes that ESG frameworks control emerging-economy companies primarily on their ability to do things, not by regulation, and that ability ESG frames consume is the same precious managerial, technical and financial asset that innovation policy aims to create. The evidence for this claim in the review is the governance retrenchment that took place in 2025–2026. The European Union's Omnibus I directive has dramatically reduced the scope of sustainability reporting, reduced disclosure standards and imposed a mandatory value chain limit, while the Indian securities and exchange board has repeatedly postponed efforts to impose mandatory value chain assurance under its reporting framework, despite reports of a shortage of assurance practitioners. They are not mutually exclusive concessions, but the same conclusion twice: Administration capacity was not adequate to handle measurement demand. This review creates two analytical tools, a transmission architecture that identifies the statutory, capital market, contractual and border pathways that enable the transfer of ESG obligations to emerging economy firms, and a governance interface that outlines three dimensions of misalignment with innovation policy (temporal, directional, distributive). It proposes that retrenchment in statutory channels does not alleviate the emerging economy suppliers, but simply shifts the governance to contractual channels with neither proportionality nor de minimis nor representation. This is followed by a typology of four systems and a research agenda. The review has no primary data, no estimates and is conceptual and evaluative.