FROM ETHICAL CONSIDERATION TO FINANCIAL DETERMINANT: A SYSTEMATIC LITERATURE REVIEW OF ESG IN SUSTAINABLE FINANCE

Abstract

This study systematically reviews the literature on ESG in sustainable finance to examine how ESG has been conceptualized, measured, and evaluated in financial management research, and to identify theoretical, methodological, and empirical gaps for future inquiry. A systematic literature review was conducted following the PRISMA 2020 guideline. The search was performed in Scopus for the period 2016–2026 using predefined ESG and sustainable finance keywords. From 1,591 records identified, screening and eligibility assessment resulted in 28 final studies. Methodological quality was assessed using the Mixed Methods Appraisal Tool (MMAT), and the evidence was synthesized through thematic and narrative synthesis supported by framework-based logic. The review shows that ESG is conceptualized as a disclosure mechanism, risk signal, governance device, investment criterion, and value-creation driver. Empirical findings suggest that ESG contributes to financing efficiency, cost of capital reduction, equity financing, banking stability, portfolio resilience, and green innovation; however, these effects remain context-dependent and vary by ESG measurement, country, industry, method, and time horizon. ESG has become a central construct in sustainable finance, yet the evidence remains fragmented. This review contributes by integrating dispersed findings and proposing future research on causal mechanisms, disaggregated ESG dimensions, and underexplored financial contexts.