Environmental, Social, and Governance (ESG) and Corporate Financial Performance
DOI:
https://doi.org/10.54518/eir.1.1.2023.1186Keywords:
Corporate Sustainability, Environmental, Social, and Governance (ESG), Financial Performance, Risk ManagementAbstract
Growing attention to sustainability has encouraged companies to integrate Environmental, Social, and Governance (ESG) principles into their business strategies. ESG is no longer viewed solely as a sustainability framework but also as a factor that may influence corporate financial performance. This study aims to examine the relationship between ESG and corporate financial performance using a Systematic Literature Review (SLR) approach. The study collected data from scholarly articles indexed in Google Scholar and published over the last five years. The literature selection process was conducted using predefined inclusion and exclusion criteria, resulting in fifteen relevant articles for analysis. The findings indicate that ESG generally contributes positively to financial performance through improved operational efficiency, enhanced corporate reputation, better risk management, and greater access to financial resources. However, several studies report inconsistent results due to differences in research contexts, firm characteristics, and measurement indicators. These findings suggest that ESG has become a strategic factor that supports long-term corporate sustainability and value creation. The study contributes to the growing literature on sustainable business practices and provides insights for managers, investors, and policymakers regarding the economic implications of ESG implementation.
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