ESG investing & firm performance: Retrospections of past & reflections of future

The purpose of this research is to investigate the current state of the literature on\r\nenvironmental, social, and governance (ESG) investing, and study the impact of ESG\r\nratings on firm performance. Corporate sustainability has evolved as a concept and is\r\nincreasingly being integrated with investment analysis. The present study performs a\r\nsystematic literature review (SLR) using the theory, context, characteristics, and\r\nmethodology (TCCM) framework to provide valuable insights and research directions\r\nin the context of ESG investing. The review is based on 198 articles published from\r\n2010 to 2022 and follows the scientific procedures and rationales for systematic literature\r\nreviews (SPAR-4-SLR) protocol using the Scopus database. Further, the\r\nresearch also re-examines the empirical studies based on ESG as a determinant of\r\nfirm performance using a meta-analytical approach. The research findings suggest a\r\npositive impact of ESG ratings on firm performance. However, an intriguing discovery\r\nsurfaced when empirical studies were segmented according to the ESG rating methodologies\r\nprovided by Bloomberg and Thomson Reuters. The purpose of this\r\nresearch is to offer a comprehensive and collective scholarship of the subject by\r\nadopting a mixed-method approach. Further, it provides a conceptual framework,\r\nthereby linking the various elements of ESG investing and explaining the channels of\r\ntransmission of ESG translates into value creation for the shareholders. It encompasses\r\nextensive research agendas discussing barriers to ESG implementation, the\r\nmateriality of ESG practices, informativeness of sustainability reporting, sustainability\r\nperformance, and sustainable underpinnings.