Driving ESG Disclosure towards Financial Performance : A Systematic Literature Review

Abstract

Environmental, Social, and Governance (ESG) is a term frequently used to refer to a company's Corporate Social Responsibility (CSR). ESG is referred to by a variety of terms, including Corporate Social Disclosure (CSD), Corporate Social Responsibility Disclosure (CSRD), and other. The introduction of ESG disclosure started with the initiation of corporate responsibility practices. Many researchers have conducted study on the influence and knowledge of ESG disclosure on the financial performance of companies as a result of this issue; however, few researchers have sought to consolidate and highlight systematic literature on the same topic. Therefore, this article aims to provide a systematic literature review on independent studies related to the impact of ESG disclosure on financial performance. The review processes included five key methodological steps, namely guided by review protocol, formulation of research questions, systematic searching strategies based on identification, screening and eligibility on several established database followed by quality appraisal , and data extraction and analysis. Further review of these article resulted in three themes – accounting-base performance, market performance and operational performance. This three themes further produced a total of nine sub-themes. The study offered almost significant contributions for nexus between ESG disclosures and financial performance. The findings explained the importance of disclosing the non financial information namely ESG towards the better financial strength for the companies.