esg disclosure

sustainability reporting

social responsibility csr

esg performance

sustainability performance

corporate environmental

environmental sustainability

environmental social

research limitations implications

Accounting and finance

Interest in why firms conduct environmental, social and governance (ESG) activity is longstanding and increasing. Our understanding, however, remains fragmented with alternative accounts that seek to explain the relationship between ESG performance (ESGP) and corporate financial performance (CFP). This paper reviews alternative accounts for the relationship and finds that the weight of empirical evidence shows a positive, statistically significant but economically modest ESGP-CFP link, consistent with theoretical expectations. This economically modest relationship suggests ESG activity is unlikely to be primarily motivated by narrow measures of CFP. Further scholarship viewing ESG as part of overall firm activity would be constructive.

Environmental, social and governance (ESG) activity and firm performance: a review and consolidation