THE INVESTIGATION OF THE ASSOCIATION BETWEEN ESG PERFORMANCE AND FINANCIAL RESULTS: AN IN-DEPTH LITERATURE REVIEW

Abstract

In recent eras, Environmental, Social, and Governance (ESG) research has become a hot topic in academia and industry perspectives due to its potential impact on firm performance. The basic purpose of this study is to find out the relationship between ESG practices and firm financial outcomes by reviewing existing literature. This review study used literature with qualitative techniques and was well-suited for content analysis about this topic and how environmental, social, and governance factors influence the performance of the firm's growth. A systematic approach was used to analyze the peer-reviewed articles from high-impact journals, focusing on the influence of the ESG factors on firm performance. The review reveals that ESG performance has a positive, negative, and neutral effect on financial performance, with variations depending on industry and geographic context. This study also highlights the use of three key theories, such as stakeholders, Legitimacy, and signaling theory, used to understand the underlying mechanism of the relationship. In conclusion, we find that this study emphasizes the importance of ESG disclosure, practices for firm performance, particularly enhancing long-term sustainability and profitability.