In the past two decades, the environmental, social, and governance (ESG) framework has evolved from a peripheral aspect of corporate social responsibility into a core organizational paradigm, attracting growing attention from investors, policymakers, managers, and scholars. This study reviews the origins of ESG both in practice and academic discourse, and explores the institutional logic that have driven its global diffusion. Building on this foundation, the study identifies key drivers behind ESG development and examines its associated risks and challenges, including inconsistent measurement standards, rent-seeking, politicization, and greenwashing. It provides a comprehensive analysis of the effectiveness and limitations of ESG in advancing corporate sustainability at the micro level. Additionally, drawing on macroeconomic and industry-level cases, the study evaluates the potential contributions and practical constraints of ESG in promoting economic growth and social welfare at the macro level. Finally, based on recent advancements in management, finance, and public policy research, this study outlines prospective trajectories for the evolution of ESG research and practice: moving from responsibility-based narratives toward institutional logic, ESG is no longer merely about “doing the right thing.”