ESG Practices and Company Value: A Literature Review

Abstract

Research Question: Carry out a bibliometric analysis and systematic review of the literature on the adoption of sustainable practices and company profitability. Motivation: The objective is to answer the following research questions, due to the growing interest in the different strata of society on this topic: (1) Which ESG scores are most associated with companies' value creation?; (2) What are the main proxies related to the creation of value and financial performance of companies?; (3) What are the collaboration patterns between the main authors, institutions and countries in the analyzed sample?; (4) Which articles, authors and journals have the greatest impact on the topic of this research? and (5) What are the main connections between the sample documents? Idea: Conduct a review of existing literature and propose an agenda for future research on the relationship between sustainable practices and company profitability. There is a demand for companies to improve their performance, going beyond financial. Therefore, the dissemination of sustainable practices improves the efficiency of investments. Data: The initial sample consists of 303 articles that evolved into a final sample of 63 articles, obtained between 2015 and 2022, from the Web of Science and Scopus databases. Tools: Bibliometric analysis is carried out using RStudio, Biblioshiny and Rank Words software. It investigates and confirms the main bibliometric laws – Lotka and Bradford. The systematic review is carried out via classification of a (sub)categorization matrix. Findings: As a result, the greater importance of the environmental issue in developed countries stands out. A future research agenda aimed at standardizing and mandatory disclosure of sustainable metrics is also identified. The analysis of the effect of these standards on the financial performance of companies can be better supported by the theories of legitimacy and diversification, being operationalized by non-linear or logistic multilevel regression models. Contribution: The results obtained can contribute to the evolution of research on the topic of the impact of sustainable practices on company profitability.