Contemporary challenges of globalization and climate change highlight the urgent need to identify legal mechanisms that stimulate sustainable development. The concept of ESG (Environmental, Social, Governance) has acquired a pivotal role as an integrative framework that aligns business economic interests with environmental and social responsibility. Within this context, particular attention is drawn to environmental innovations that reduce the carbon footprint, promote the rational use of resources, and enable the transition towards a circular economy. This article examines the role of ESG in shaping a favorable environment for the development and implementation of such innovations, with a particular focus on European legal experience. The European Union stands out as one of the leading regions in institutionalizing ESG principles, introducing directives on non-financial reporting, sustainable finance, and corporate responsibility. These instruments not only enhance the transparency of business practices but also create additional incentives for innovative activity in the field of environmental technologies. By analyzing the European experience, it becomes possible to outline prospects for its adaptation within national legal systems, which, in turn, would enhance economic competitiveness, foster integration into international markets, and contribute to achieving the UN Sustainable Development Goals. Thus, ESG serves not only as a criterion for evaluating corporate activity but also as an essential legal instrument for supporting environmental innovation, ensuring a balance between economic, social, and environmental interests.