Environment, Development and Sustainability

https://doi.org/10.1007/s10668-023-02921-x

REVIEW

Environmental‑, social‑, and governance‑related factors

for business investment and sustainability: a scientometric
review of global trends

Hadiqa Ahmad1 · Muhammad Yaqub1 · Seung Hwan Lee1

Received: 18 April 2022 / Accepted: 6 January 2023

© The Author(s), under exclusive licence to Springer Nature B.V. 2023

Abstract
Consideration of environmental, social, and governance (ESG) factors can contribute to
the environmental and economic performance of organizations in terms of investment
and sustainability. This article thoroughly reviews the following factors influencing deci-
sions regarding ESG policy by businesses: economic performance, environmental sus-
tainability, pollution and waste, corporate social responsibility, gender, and governance
structure. Moreover, we review the impact of these factors considering ESG disclosure,
the global pandemic, religion, governing board and size, national interest, and technologi-
cal advancements. The literature reports that ESG disclosures of environmental, economic,
and social sustainability performance can strengthen business sustainability and perfor-
mance. Religion-based businesses demonstrated better socio-environmental performance
but not governance. An independent governing board has a positive impact; however, dual-
gender boards negatively impact ESG disclosure. Significant diversification potential in
ESG investments was observed during the COVID-19 pandemic. Adopting an ESG policy
enhances the innovation capacity, innovative activities, value creation, and financial per-
formance of businesses. Overall, the social and environmental performance demonstrated
a significantly positive relationship with business sustainability, indicating that business
economy and creating value for society are mutually dependent. The literature summary
presented in this review will help future research on ESG factors that influence business
investments and sustainability.

Keywords Business investment · Environment · Governance · Society · Sustainability

* Muhammad Yaqub
[email protected]
* Seung Hwan Lee
[email protected]
Hadiqa Ahmad
[email protected]
1
School of Civil and Environmental Engineering, Kumoh National Institute of Technology, 1
Yangho–dong, Gumi, Gyeongbuk 730‑701, Republic of Korea

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1 Introduction

Global business investment and sustainability are receiving increasing attention in address-
ing sustainable development and green consumerism (Nosratabadi et al., 2019). The lit-
erature presents various strategies for making investment decisions considering envi-
ronmental, social, and governance (ESG) factors. Generally, investors believe that ESG
information is a benchmark that can provide more comprehensive and persuasive evidence
on how your organization positively affects the world (Hayat & Orsagh, 2015; Bernow
et al., 2017). ESG policy affects overall business performance in terms of sustainable busi-
ness investments (Husted & de Sousa-Filho, 2017). In the past, sustainability has been the
subject of considerable debate concerning the adaptation of ecosystems to environmen-
tal change. A literature review confirms that sustainability is essential for addressing such
emerging problems (Rajesh, 2020). Sustainable business investment and development prin-
ciples include a triple-based approach that integrates socioeconomic and environmental
issues (Rajesh, 2020). The literature provides a mixed picture of the relationship between
the environmental and financial performance of the organizations. Both positive and nega-
tive relationship trends have been reported by different researchers, in addition to a few
neutral interactions (Kluza et al., 2021). A meta-analysis confirmed a clear positive cor-
relation between social and environmental commitment and the financial performance and
sustainability of a business (Orlitzky et al., 2003). Integrated sectors, especially financial
institutions, are under pressure to use ESG analysis in decision-making (Buallay et al.,
2020; Bąk & Cheba, 2020). Moreover, media pressure plays a key role in motivating com-
panies to promote ESG transparency (Garcia-Sanchez et al., 2014).
Gender diversity is an important factor in the economic and sustainable growth of a
business. The establishment of a gender diversity board (GDB) in an organization can play
a vital role in determining the relationship between gender and financial performance,
equity risk, and ESG disclosure (Jizi & Nehme, 2017) (Wasiuzzaman & Wan Moham-
mad, 2020). Previous studies have reported positive, negative, and indecisive relationships
between GDB, financial risk, and organizational performance (Sila et al., 2016; Haque &
Ntim, 2018; Perryman et al., 2016).
The ESG disclosure demonstrates a strong correlation between governance disclosures
and analyst forecast accuracy, which does not exist for environmental disclosure (Bernardi
& Stark, 2018). ESG disclosure can also result in greater revenue for businesses than non-
disclosure (Dhaliwal et al., 2011) and can be aligned with national interest (Orij, 2010). A
previous study investigated the number and quality of ESG disclosures by companies based
on its three inherent components. It concluded that firms exposed to additional testing and
adequate monitoring by institutional investors were less likely to participate in ESG green
washing (Yu et al., 2020). Corporate ESG disclosures have increased significantly to fulfill
stakeholder requirements and create greater corporate accountability (Eccles et al., 2014;
Tamimi & Sebastianelli, 2017). ESG disclosures can increase public awareness and corpo-
rate acceptance. This can lead to increased businesses using varied strategies to run their
business and globally disclose their ESG information sustainably. The 2018 Global Report-
ing Initiative (GRI) report indicates that 12,964 companies worldwide have issued 50,197
voluntary sustainability reports with various levels of ESG disclosure (Dumay et al.,
2010). Therefore, it is crucial to focus on whether the disclosure of ESG policy (satisfac-
tory or poor) adds or reduces substantial value, considering shareholder interests. However,
national risk and global stakeholder engagement may also affect this relationship (Rod-
ríguez et al., 2014; Dhaliwal et al., 2012).

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Environmental‑, social‑, and governance‑related factors…

Some researchers have investigated the impact of cross-listing on the ESG performance
of firms, arguing that it satisfies expectations and improves ESG performance by providing
strong legitimacy (Stevens & Shenkar, 2012; Ramachandran & Pant, 2010). Cross-listed
firms fulfill social expectations regarding environmental protection and defend the inter-
ests of their constituents (Del Bosco & Misani, 2016). Literature reported the magnitude
of ESG consideration in robust systems to ensure complete terms and the potential impact
of sustainability indicators on economic performance (Deegan, 2002; Bassen & Kovács,
2020; Hummel & Schlick, 2016). Scholars have also reported the role of Islamic firms in
preventing environmental damage and supporting social empowerment (Azmi et al., 2019;
Chowdhury & Masih, 2015; Qoyum et al., 2021a, 2021b; Sairally, 2013). Accountability,
public responsibility, technological advancements, and the global pandemic are important
factors affecting the economic sustainability of a business.
The ESG is a function of public accountability and corporate social responsibility
(CSR) that can contribute to the economic performance of organizations. Findings suggest
that while social performance demonstrates significant economic improvement, environ-
mental performance exerts a small positive effect, and a weak correlation exists between
governance and economic activity (Sila & Cek, 2017). The literature shows a positive rela-
tionship between CSR and technological innovation. Research on technological change
rates has shown the ability of an organization to shape its innovation capacity (Shao & Lin,
2016). Blockchain technology can be helpful for environmental sustainability to achieve
sustainable development goals (Parmentola et al., 2022). The COVID-19 pandemic has
highlighted the link between humans, the planet, and the benefits of innovation, especially
with regard to health, poverty, climate change, and the global financial system (Adams &
Abhayawansa, 2021). For the expansion of ESG policy, the latest technological advance-
ments, global pandemic issues as well as geographical, political, and religious factors
should be considered. This can increase investor interest by facilitating the decision to start
or continue with a running business to maintain ESG practices. Previously, no comprehen-
sive study has discussed the global rise and impact of all ESG-related factors on corporate
business investment and sustainability. Therefore, this study aims to identify the process
behind selecting ESG factors and their importance to investors in making investment deci-
sions. By examining the literature, this review identified critical influential factors that
companies should consider for their sustainability and analyzed them according to their
relationship with ESG categories. We also address limitations in previous research and dis-
cuss future perspectives and implications.

2 ESG drivers, indices, and factors

It is important to understand how and why ESG factors can affect the performance of a
business. The literature suggests that established investors and asset managers focus on
ESG policy to analyze risk management and improve risk-adjusted returns. Surveys have
shown that 70% of investors make decisions based on sustainable investment criteria, and
the remaining 14% actively consider it (Boffo & Patalano, 2020); > 50% of asset manag-
ers and investors seek to implement ESG policy for long-term benefits and firm reputation
and < 30% to offer various products (Berg et al., 2019); and growth in ESG policy was
faster than that of other business policy strategies, with investments worth several trillions
expected within the next few years. The various drivers of ESG incorporation in business
decision-making are shown in Fig. 1.

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 H. Ahmad et al.

Fig. 1  Drivers of ESG integra-

tion in business decision-making
(Boffo & Patalano, 2020)

Different index providers have discussed factors related to ESG policies. ESG index
providers are given in Table 1. A sustainable environment, energy efficiency, carbon emis-
sions, pollution, and the use of natural resources are considered environmental factors.
Workforce-related matters, including health, training, diversity, human and community
rights in the big picture, and privacy, are significant social aspects (Leach, 2016). A busi-
ness can face legal issues and penalties owing to poor environmental policies. On the social
side, the inappropriate handling of workers can result in low productivity, high absence,
weak relationships with clients, and poor business governance. It can also cause unaccepta-
ble behaviors associated with accounting, wages, fraud, and disclosure irregularities (Win-
ther, 2021). The literature reported > 400 different ESG metrics used by Thomson Reuters;
for this review, we focused on 186 metrics and divided them into ten groups: emissions,
resource use, workforce, shareholders, innovation, community, human rights, product
responsibility, management, and CSR approach (Boffo & Patalano, 2020; Nemoto & Mor-
gan, 2020).
Bloomberg’s environmental and social impact metrics deliver exclusive ESG data by
grouping industries into lower, medium, and higher environmental impact categories,
with only lower and higher social metrics at the same governance metric in each industrial

Table 1  Major ESG indices and relevant factors used by different providers
Major indices Environmental Social Governance

Bloomberg Carbon emission Supply chain Executive compensation

Climate change Gender diversity Shareholder rights
Pollution/Waste Political influence Staggered boards
Resource depletion Human rights Independent directors
Renewable energy Community relations Cumulative voting
Thomson Reuters Resource usage Employee Corporate governance
Carbon releases Basic rights Corporate behavior
Invention Public
Product accountability
MSCI Climate change Human capital Management
Sustainability initiative Product liability Shareholders
Pollution/Waste Stakeholder opposition CSR strategy
Natural resources Social opportunities

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Environmental‑, social‑, and governance‑related factors…

sector. Thomson Reuters provides innovative index- and index-related services globally for
the finance community that help investors make better decisions. As responsible invest-
ing is becoming vital to investors’ decisions, this index serves as a balanced benchmark
for measuring the ESG performance of a business. Morgan Stanley Capital International
(MSCI) is an international provider of real estate indices, multi-asset analysis, climate
change, and ESG indices. Significant index matrices defined by Bloomberg, Thomson
Reuters, and MSCI are presented in Table 1. Choosing one of these three indices is dif-
ficult because they consider different business-related factors. Therefore, investors are now
asking for standardized reporting metrics because of the difficulties in using the various
metrics for business investment and sustainability. Thus, several metrics providers have
established procedures for ESG reporting, and others are eager to set standard guidelines
(Inderst & Stewart, 2018).
The business sustainability flowchart proposed by the Sustainability Accounting Stand-
ards Board (SASB) is shown in Fig. 2, which explains environmental, governance, innova-
tion, and social and workforce factors. As part of progress, the business sector integrates
reporting frameworks regarding ethical standards and financial materiality (Hadjor, 2010).
Certain index providers are unclear about industry standard metrics, and several attempts
have been made to determine the most important features and indicators, including various
sectors. However, while metric providers may provide the direction for building resources
and their types to be disclosed, they do not generally offer greater financial advice for
industrial feasibility (Park & Jang, 2021). This reveals a significant gap in explanations that
can contribute to the rise of ESG rating providers. For decades, investors have focused on
financial materiality in the business governance process and executive financial incentives
for risk management. Three decades ago, the Organization for Economic Cooperation and
Development (OECD) developed the Principles for Corporate Governance to evaluate the
importance of business governance and its performance (Fernando, 2021). Climate change
has significantly impacted the economic and financial growth of businesses, increasing
awareness and forcing investors to draw a link between economics and climate risk man-
agement. The growth in climate change risk research highlights trends affecting the eco-
nomic, financial, and business sectors. Climate change includes numerous physical risks
such as hurricanes, fires, floods, and the adverse impacts of spillovers in supply chains

Business
sustainability

Environmental Governance Innovation Social Workforce

Carbon emissions Risk management Human rights

Energy efficiency Product LCA Labor practices
Business ethics Community
Air & water Business resilience Health & safety
Competition relations
quality Supply chain Employee
Legal & Customer welfare
Pollutants/waste Sourcing engagement
regulatory Customer privacy
Ecological impact Physical impacts Gender diversity
management Data security

Fig. 2  Business sustainability flowchart proposed by SASB

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 H. Ahmad et al.

or financial markets. Expectations regarding climate-related factors are increasing because

they can significantly impact financial assets. Industries are particularly heavily exposed
to nonperforming resources to reduce fossil fuel consumption and other hazards (McBrien
et al., 2021). Innovation is equally important for business sustainability, including life
cycle assessment of products, supply chains, sourcing, and business resilience. Although
the instant effects of social media play a minor role, continuing profits may improve prod-
uct strength, retain staff, and receive customer loyalty, which is generally related to CSR.
Nevertheless, organizational investment generally highlights that obtaining societal support
is the most challenging factor because there is little consensus in various countries about
what is considered a tangible and appropriate standard (Madison & Schiehll, 2021). To
date, COVID-19 has focused attention on the importance of social aspects incorporating
performance and image and has led to ideas at what level companies should turn to par-
ticipatory management to withstand unprecedented social challenges (Sugimoto, 2018).
According to the SASB, the integration of ESG analysis for systematic study is important
in the investment process for business sustainability.
Finally, integrating ESG policies entails precise and systematic implementation oppor-
tunities and risks in major organizational investment processes. In contrast to standard
schemes, ESG policy incorporation does not require peer group evaluation or leader obe-
sity because ESG factors are evaluated based on asset selection, measurement, and risk
management processes (Sloggett & Gerritsen, 2016). Various strategies are used to inte-
grate ESG factors into an investment, along with their advantages based on different asset
classes and targets (Eccles et al., 2017). The hallmarks of ESG mergers usually comprise
devoted governance to supervise ESG mergers; major capital provided for ESG consid-
eration assessments within group management teams; clear eviction guidelines to avoid
companies with very low scores; and collaborative development strategies, measurable
research, and performance evaluation tools (Hill, 2020).

3 Methodology

An online systematic literature review based on the stages recommended by several authors
was used to compile and analyze scientific information regarding ESG policy, as shown in
Fig. 3. Systematic reviews of online publications that follow the Popular Reporting Stand-
ards for Systematic Reviews and Meta-Analysis Protocols have been reported (Mohamed
Shaffril et al., 2021; Boland et al., 2017; Ampiaw et al., 2021). This protocol allows
reviewers to make a suitable plan, understand a potential problem, and explicitly docu-
ment according to the plan, allowing others to compare the protocol and then complete a
review. Moreover, it helps to replicate and validate review methods if needed, prevents ran-
dom decision-making regarding inclusion conditions and data extraction, and can decrease
duplication of literature (Moher et al., 2015; Page et al., 2021). Therefore, we have adopted
Meta-Analysis Protocols in this review because of the above-mentioned advantages.
The literature review revealed various aspects of ESG without specific definitions, such
as economic, governance, social, ethical, and environmental factors; CSR; or socially
responsible investment (Rezaee, 2016; Jain et al., 2016). However, the terms used were
similar to ESG, which is important for investors to assess business conduct and ensure
business sustainability. Environmental processes and disclosures include estimates of a
company’s carbon release, waste, pollution, climate change risks and conservation, and nat-
ural resources. Social knowledge ranges from labor linkage with legal product obligations,

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Environmental‑, social‑, and governance‑related factors…

Define objectives Research question Develop protocol Identification

Literature review Literature screening and assessment

Database search Irrelevant to Duplicate Excluded review

Execution
articles =139 the topic =25 articles=29 articles=5

Articles accepted for

this study = 80

Data extraction Analysis & synthesis Review writing Writing

Fig. 3  Flow diagram of data search and selection for systematic review in this study

such as managing the supply chain, investing in the public interest, labor and human rights
guidelines, and how health and safety effectively negate risks (Lee & Cave, 2014; Kim
& Park, 2016). In addition, companies should have an active management structure that
includes a board, research strategies, ethics, and shareholder rights according to the area
and economy of the company, which can develop confidence and promote innovation in
the market (Taliento et al., 2019). A three-dimensional framework (ESG) has been devel-
oped to reinforce management processes for observing and promoting sustainable business
investments (Alsayegh et al., 2020).
The first phase of our study used meta-analysis to identify the ESG factors that influence
business investment and sustainability. The meta-analysis was performed using a database
of scientific articles compiled from published reviews in a specific area of ​​interest. In the
identification stage, we defined the review objectives as ESG, ESG disclosure, ESG influ-
encing factors and implementation, ESG and industrial revolution, and economic and envi-
ronmental aspects. Subsequently, research questions were defined for qualitative reviews to
set a criterion for selecting studies for the systematic review (Ampiaw et al., 2021; Moher
et al., 2009). A few research questions were: what is ESG, why is ESG important, what are
the ESG influencing factors, and what are the economic and environmental impacts? Sub-
sequently, a literature review protocol was developed to answer these questions and achieve
research objectives. To address the question of article quality, we considered the content
of peer-reviewed journals from search engines such as Web of Science, Google Scholar,
Science Direct, Wiley Online, Scopus, and PubMed based on bibliometric analysis of sci-
entific literature (Effendi et al., 2021). In addition to scientific reviews, other important
information published before 2013–2021 was retrieved from publications selected from
various news journals using keywords including ESG, ESG disclosure, ESG-related fac-
tors and applications, ESG and industrial transformation, and economic and environmental
factors, and the results were selected up to September 30, 2021. Articles were considered
for the study if they satisfied the following criteria: (1) original English research articles;

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 H. Ahmad et al.

(2) published between January 2013 and September 2021; (3) discussed issues affecting
ESG; (4) contained disclosure of ESG and its use; (4) discussed industry transformation
and ESG relations; and (5) mentioned economic and environmental issues. The bibliogra-
phies of the selected topics have also been reviewed for additional references.
A flow diagram of data search and selection criteria for systematic review followed for
this study is shown in Fig. 3 as adopted in a recent review article (Pattnaik et al., 2021).
The action phase began with a search of selected websites. Duplicate articles (available
on various websites and combinations) were considered only for a single study. Each
selected article was rated as appropriate or unimportant based on its title and ability to
respond to research questions. After the related articles were identified, an analysis of those
studies was conducted. In this study, we thoroughly evaluated pertinent papers to choose
only those directly related to the subject of ESG. Previously, the relevant data were cross-
checked. The study phase began with the extraction of data, including identifying data
closely related to the purpose of this study. Systematic article analysis and data evalua-
tion were performed based on the grounded data theory (Valdés et al., 2021). Through a
comparative analysis of articles, data were collected, coded, and investigated to produce
ideas. A section-wise comparison was also conducted to establish associations between the
topics, thus obtaining convincing answers to the questions and developing their meanings.
Finally, the reporting phase began with the “writing” process, which involved appropriately
combining data from articles for scientific interpretation through figures and tables. The
analyzed data stated the main topics covering several ESG themes: (A) all related factors,
(B) disclosure and implementation, (C) industrial transformation, and (D) economic and
environmental factors.
Marczewska & Kostrzewski (2020) recently conducted a meta-analysis on the concept
of sustainable business models (Marczewska & Kostrzewski, 2020). Using article review
techniques, frequency measurements, and quote influence indicators, the authors conclude
that business topics and sustainability are closely linked to entrepreneurship, innovation,
and value-added research. However, as it was a bibliometric analysis, they did not develop
their study into a formal model that excluded the size and significance of the relationship
presented. Research on business sustainability and its drivers lacks the latest cross-industry
meta-analysis that summarizes the current state of knowledge in the sector. In this study,
we conduct a thorough literature review.

4 Assessment results

In this section, we assessed the literature based on publishers, journals, the annual rate of
publications, global status, targeted area, and research category. A complete overview of
the publication rates of ESG as a subject by various publishers between 2009 and 2021 is
shown in Fig. 4. Notably, 12 different reference publishers published several studies. The
distribution of articles considering the highest and lowest publishing rates per publisher
was as follows: Elsevier led with 29 articles, followed by Wiley Online Library (22), MDPI
(17), Springer (4), and Emerald Insight (2). The study also included (1) article from other
publishers such as Taylor and Francis, Portfolio Management Research, Korea Economic
Institute, Vilnius Tech, Scientific Information Database, and Inder Science Online.
The major journals from various publishers from 2013 to 2021 are shown in Fig. 5. Sta-
tistics indicate that approximately 38 journals with 38 references were published in approx-
imately 80 articles. The distribution of the reviewed articles with the lowest publication

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Environmental‑, social‑, and governance‑related factors…

Fig. 4  Overview of articles published by various publishers

Fig. 5  Publications by vari-

ous journals (≥ 2 publications;
2013–2021)

volume in each journal was as follows: 28 journals published one article within the title,
5 journals published (2) articles, and 1 journal published (3) articles. An astonishing peak
of publication was linked to the listed journals: sustainability led by publishing (15) arti-
cles, followed by business and environmental strategy (11), public commitment and envi-
ronmental management (8), clean production journals (5), and British accounting (3).
Other journals, such as the Business Research Journal, the Extractive Industries and Soci-
ety, Borsa Istanbul Review, and the Journal of Corporate Finance, published (2) articles
each. In addition, (1) article from each of the other 28 magazines was considered. The

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 H. Ahmad et al.

distribution demonstrates the preference of researchers in publishing articles in Scopus and

indexed journals.
The distribution of articles focusing on ESG related to business sustainability between
2013 and 2021 indicated that interest in this type of research increased at a specific rate
until 2018 (Fig. 6). Generally, the number of published articles increased from 2018 to
2021; it increased significantly in 2021 and 2019, with (28) and (19) published papers,
respectively. The number of books was lower than that during the peak years. This was due
to reduced publication prices before 2018. The exception was the number of papers pub-
lished in 2021 because the data were collected up to September 30, 2021, and a few articles
may have been published by the end of 2021. These annual variations and improvements
in publishing quality can be translated into two aspects. First, recent attention to sustain-
able business growth has increased the number of publications in the region, particularly
over the past few years. We confirmed that the annual number of ESG study-based research
papers has increased since 2018. Second, owing to the development and knowledge of
social and environmental issues, strong policies are the main factors in ESG studies that
stress and motivate businesses.
Globally, major countries (Fig. 6) have a strong interest in ESG-related factors affect-
ing business sustainability based on the publishing rates per country, such as Spain (11)
and Italy (8). The UK, China, the USA, and Canada published seven, five, four, and four
articles, respectively. In addition, three publications from Australia, Malaysia, the UAE,
Germany, South Korea, and Turkey were considered in this study. There is little interest in
countries such as Indonesia, Japan, Estonia, Hong Kong, Mexico, Poland, Lebanon, and
Brazil (two publications each), followed by France, Norway, Palestine, Pakistan, India,
Romania, and Saudi Arabia (one article each). These variations in the number of ESG

Fig. 6  Annual publication rates and global status of ESG literature studies

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Environmental‑, social‑, and governance‑related factors…

publications that contribute to the sustainability of the business in each country are due
to the consideration, promotion, and implementation of ESG policies at the government
level. As is well known, the proliferation of ESG problems in any region encourages local
researchers to solve issues related to the field, improving knowledge and the value of publi-
cations. Although certain regions are ranked high globally, such as China, the USA, India,
Europe, and Western Europe, a few (developed countries) have been obliged by organiza-
tions to implement ESG policies within the previous decade. Therefore, these developed
countries pay less attention to the ESG factors that influence businesses and publish arti-
cles on this topic than countries in other regions (China and the USA). The high level of
publishing in a few regions over the previous decade may be because several developing
countries are still in the early stages of implementing ESG policies compared to developed
regions that have addressed these issues before the last decade.
Articles were analyzed to determine ESG characteristics related to business investment
and stability. Considering the nature of these factors, they were included in at least one of
the following categories: environmental, social, administrative, financial, economic, socio-
economic, and accounting. The relationship between the identified assets and sustainable
business in each article is described as a standard for the published article selected for
this study, as shown in Fig. 7. With regard to the features of ESG and sustainable busi-
ness used by authors worldwide, the maximum number of publications used the business
and financial industries as their subjects, with 24 and 22 articles, respectively. This was
followed by studies with an economic and environmental focus (17 articles) and commu-
nity- and economics-based publications (seven articles). In addition, three articles each
addressed ESG, environmental, and social welfare issues and their relationships with busi-
nesses. In contrast, only one article focusing on accounting and finance, sustainable gov-
ernance, accounting, or public policy has been reported in the literature and is considered
in this study. This publishing trend may occur because most business and financial studies
consider ESG and its factors as important parameters for business growth, sustainability,
and financial stability. Ecosystems are closely linked with economic, socioeconomic, and

Fig. 7  Majorly targeted ESG research areas during 2013–2021

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 H. Ahmad et al.

environmental research. This study highlights that business, financial, economic, and envi-
ronmental areas have been at the forefront of research in the past decade. However, the
social aspects of ESG were not found to be the primary objectives in the literature; this
may be because of a lack of knowledge and introduction of the ESG concept worldwide.
Therefore, further research on ESG factors relating to business investment and sustainabil-
ity is required to collect additional information, understand them, and develop future poli-
cies for implementation.

5 Discussion

In recent years, business investments and sustainability have become major concerns for
investors. Therefore, this study aims to identify ESG-related factors, their consideration
criteria, and the importance of these factors for investors in decision-making for business
investment and sustainability. Investors evaluate corporate social and environmental reac-
tions based on ESG performance because firms with low scores face high ESG disputes.
Governments and governing bodies also pressurize nonsocial and environmental compa-
nies that have failed to adopt ESG policies. ESG performance has become a symbol of
environmental awareness and community commitment for organizations worldwide. Today,
investors are more interested in the stable processes of a firm than in their operational and
financial benefits. Firms that ignore ESG features and do not integrate them into their busi-
nesses face unnecessary consequences for investors (Shakil, 2020). A GDB can play an
important role in addressing ESG and financial risks. However, research on gender issues
in a firm’s governing body is limited to specific gender relationships in other areas, includ-
ing equity risk, ESG disclosure, and financial performance (Jizi & Nehme, 2017; Wasiuz-
zaman & Wan Mohammad, 2020). As important stakeholders, female panel members may
balance the company’s risks by making investment decisions more effectively than their
male counterparts (Sila et al., 2016). Female decision-makers emphasized the attainment
of environmental and social sustainability to gain funding from influential investors and
a better resource approach (Haque & Ntim, 2018). In addition, the literature has reported
positive, negative, and incomplete evidence of GDB and severe risk (Perryman et al., 2016;
Lenard et al., 2014). The GDB may be associated with different possible factors, includ-
ing social, cultural, religious, and geographical aspects. Therefore, an organization should
consider them for better implementation of ESG and its linkage with society. In both devel-
oping and developed economies, a major trend has been observed concerning the use of
a combination of non-financial factors, such as ethics and ESG, in deciding on business
investment (Berry & Junkus, 2013; Crifo et al., 2015; Nakamura, 2013). The inclusion of
non-financial criteria in evaluating firm performance and the investment selection process
has been considered by several researchers as they have a significant relationship (Adam &
Shauki, 2014; Nair & Ladha, 2014; Laldin & Furqani, 2013). Previous ESG literature has
only explored the close connection between financial risk and ESG (Sassen et al., 2016;
Shakil et al., 2019) and performance in various industries (Fatemi et al., 2018; Albitar
et al., 2020; Duque-Grisales & Aguilera-Caracuel, 2021).
A summary of the ESG disclosures and related factors is presented in Table 2. Numer-
ous factors have been studied, such as ESG disclosure, transparency, reporting and perfor-
mance, ownership, competition, BGD, and corporate governance. These factors are studied
to observe their effects on capital investment, value and performance, financial transpar-
ency, and religious factors. Although studies have demonstrated an association between

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Table 2  ESG disclosure factors and their impact on businesses

Studied factor Relative factor References

ESG disclosure Cost of capital (Ellili, 2020)

Ownership structure
ESG disclosure Business performance (Mohammad & Wasiuzzaman, 2021)
Competitive advantages
ESG performance
ESG disclosure Business value (Brooks & Oikonomou, 2018)
ESG performance
Board gender diversity ESG disclosure (Husted & de Sousa-Filho, 2019)
ESG transparency and disclosure Business value Business & Sustainable Develop-
ment Commission (2017)
ESG disclosure Equity financing (Crifo et al., 2015)
ESG disclosure Business value (Li et al., 2018)
ESG disclosure Financial transparency (Oncioiu et al., 2020)
Board gender diversity ESG disclosure (Cucari et al., 2018)
Corporate governance ESG disclosure (Lagasio & Cucari, 2019)
ESG reporting Gender diversity (Bravo & Reguera-Alvarado, 2019)
ESG reporting Corporate sustainability (Conca et al., 2021)
ESG disclosure Cost of capital (Gjergji et al., 2021)
ESG disclosure Islamic banking (Buallay et al., 2020)

management disclosure and the predictions of analysts, the link between management dis-
closure and environmental disclosure standards is weaker (Bernardi & Stark, 2018). The
GRI Sustainable Reporting Guidelines promote sustainable reporting practices at a level
comparable to financial reporting. The GRI guidelines recommend assessing ESG dis-
closure (Asante-Appiah, 2020). Over time, mandatory reporting requirements have been
introduced in various countries, improving disclosure rules and resulting in a predictable
increase in disclosure rates (Ioannou & Serafeim, 2017). CSR documents have historically
included ESG disclosures. Firms that disclose ESG information can raise considerably
more equity than non-disclosure firms (Dhaliwal et al., 2011). However, the national con-
text constrains the preexisting potential and consequences of ESG disclosure (Orij, 2010).
The literature sheds light on the impact of disclosure on socially responsible business prac-
tices and the non-liability of private equity funding. Investors support effective ESG pro-
cesses by providing compliant businesses with the choice of equity required to ensure their
growth and/or the potential to differentiate them from firms with poor ESG performance
(Widyawati, 2020; Lagasio & Cucari, 2019). Otherwise, business owners feel an extra load
of monitoring by institutional investors, discouraging them from participating in imple-
menting ESG policy (Business & Sustainable Development Commission, 2017). There-
fore, disclosure factors have positive and negative impacts if companies ask to disclose all
details, which might be unacceptable due to financial and related issues.
Financial problems and disputes heighten fears about corporate transparency, reputa-
tion, ethics, and socio-environmental performance (Galbreath, 2013; Nicholson et al.,
2011). Moreover, media pressure has played an important role in motivating companies to
promote ESG disclosure and transparency (Garcia-Sanchez et al., 2014). Corporate ESG
disclosures have increased significantly to satisfy stakeholder requirements and to cre-
ate greater corporate accountability (Eccles et al., 2014; Tamimi & Sebastianelli, 2017).

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 H. Ahmad et al.

Increasing public awareness and corporate acceptance have increased the number of firms
using strategies to sustain and disclose their ESG knowledge globally (Xie et al., 2019).
The 2018 GRI report revealed that 12,964 companies worldwide issued 50,197 voluntary
sustainability reports at various levels of ESG information disclosure (Dumay et al., 2010).
Studies have also examined the integrated effect of ESG exposure on robust performance
(Taliento et al., 2019; Atan et al., 2018). Evidence-based studies improve accountabil-
ity, transparency, and stakeholder trust, leading to collaboration and maintaining a solid
three-pillar ESG structure to strengthen corporate business sustainability (Alsayegh et al.,
2020). Researchers have reported that ESG disclosure improves performance even after
controlling for competitive advantage. The implications of this study include the need to
reconsider the level of ESG disclosure and the financial motivation of firms with high
ESG disclosure points, as high ESG scores are associated with higher competitive gains
(Mohammad & Wasiuzzaman, 2021). This study investigated whether greater ESG dis-
closure affected the business value and demonstrated a positive correlation between ESG
disclosure and firm assets, signifying that enhanced transparency and accountability and
improved stakeholder confidence can play a key role in increasing the assets of a firm (Li
et al., 2018). Therefore, it is important to focus on whether the disclosure of ESG prac-
tices (either acceptable or poor) can create and undermine strong value, thereby creating or
undermining profits for strong shareholders.
A comprehensive review of the ESG performance and related factors is provided in
Table 3. Researchers have studied many factors, including their relative ones, to highlight
the importance of specific topics. ESG performance was evaluated based on sustainability
governance, country stakeholder orientation, risk, institutional and social context, the effect
of a religious label, internationalization, ownership, global pandemic, and technological
advancements. Understanding the relationship between sustainable governance and ESG
performance in the institutional context is essential. Clearly, national risk (Rodríguez et al.,

Table 3  Overview of ESG performance and related factors

Studied factors Relative factors References

Sustainability governance, country ESG performance (Husted & de Sousa-Filho, 2017)

stakeholder
orientation, and country risk
Institutional and social context ESG performance (Kluza et al., 2021)
Effect of Islamic label ESG performance (Alda, 2021)
Cross-listing of firm ESG performance (Thiel et al., 2016)
ESG performance Financial risk (Paat et al., 2020)
ESG performance Corporate context (Paat et al., 2021)
Global equity indices ESG performance (Umar et al., 2020)
Internationalization ESG performance (Khalid et al., 2021)
Ownership ESG performance (Martínez-Ferrero & Lozano, 2021)
ESG performance Sin stocks (Paradis & Schiehll, 2021)
ESG performance Financial performance (Tanin et al., 2019)
COVID-19 ESG performance (Akhtaruzzaman et al., 2021)
Media coverage
Innovation ESG implementation (Broadstock et al., 2020)
Technological changes
Board gender diversity ESG performance (Qureshi et al., 2020) (Arayssi et al., 2020)

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Environmental‑, social‑, and governance‑related factors…

2014) and global stakeholder engagement may affect these relationships (Dhaliwal et al.,
2012). Significant stakeholder engagement should increase the impact of sustainability
management on ESG operations because of its high legitimacy, which can effectively sup-
port sustainability efforts (Dhaliwal et al., 2012). Researchers have investigated the links
between global equity indicators and the integration of companies with high ESG perfor-
mance (Umar et al., 2020). A few researchers have investigated the impact of counterfeit-
ing on the ESG performance of companies, arguing that satisfaction and improved ESG
performance help them legitimize and overcome foreign debt at various scales, facilitat-
ing their entry into new markets (Stevens & Shenkar, 2012; Ramachandran & Pant, 2010).
By adopting ESG procedures, firms of any rank can fulfill social prospects for protect-
ing the environment, shareholders, and stakeholder interests (Del Bosco & Misani, 2016).
This study introduced the magnitude of the socio-ecological system and the dominance of
a robust approach to ensure that the potential impact of sustainability indicators (Deegan,
2002; Bassen & Kovács, 2020) on economic performance is realized in its entirety (Hum-
mel & Schlick, 2016). Some scholars have elucidated that Islamic firms prevent environ-
mental damage and support social empowerment (Azmi et al., 2019; Chowdhury & Masih,
2015; Qoyum et al., 2021a; Sairally, 2013). The essence of their discussion was that the
Shariah test process did not have a specific standard to cover environmental and social
issues (Ashraf & Khawaja, 2016). The financial performance of Islamic firms has also been
studied (Qoyum et al., 2021b).
The size of CSR performance in ESG policy can contribute to the economic perfor-
mance of organizations. The findings suggest that social performance has demonstrated
significant economic improvement, and a small positive effect has been observed in envi-
ronmental performance. At the same time, there is weak evidence of governance and eco-
nomic activity relationships (Sila & Cek, 2017). Studies related to renaming reveal the
positive impact of corporate involvement in public responsibility activities on innovation
levels. Research introducing technological change rates can shape businesses (Shao & Lin,
2016). Time-dependent measurements have demonstrated consistent results for the ESG
processes of companies in terms of their design capacity (Mastromarco & Simar, 2015).
The COVID-19 pandemic has highlighted the link between humans, the planet, and ben-
efits, especially those related to health, poverty, climate change, and the global financial
system (Adams & Abhayawansa, 2021). There are concerns that businesses affected by
the financial crisis caused by the pandemic may prioritize costly environmental policies
and programs, undermining planetary survival (Amankwah-Amoah, 2020). Studies have
demonstrated how the COVID-19 shock has contributed to the volatility of ESG indicators
worldwide, including in the USA, Europe, China, and emerging markets. Low interaction
intervals indicate potential ESG investment variability during a systemic pandemic such
as COVID-19 (Umar et al., 2021). Expansion of ESG policy must be considered from the
viewpoint of the latest technological developments; global epidemic news; and local, polit-
ical, and religious issues. This can increase investor interest by motivating the decision to
start or continue with ongoing business to maintain ESG standards.
In conclusion, it is important to overcome all the challenges faced by the companies
to implement ESG, and the major one is to measure ESG performance. However, effec-
tive measurement of ESG is an uphill task because it needs tools, sensors, methodologies,
data collection and analysis to understand the company’s performance. In addition, dif-
ferent stakeholders of an organization have conflicting and contending standpoints. The
data alone cannot guarantee business sustainability; therefore, the leadership needs further
steps to create a learning environment for developing new skills, competencies, and flex-
ibility both in the ecosystem and among the workforce. First, an organization should train

13
 H. Ahmad et al.

employees in data literacy skills because it is a crucial step for intelligent and sustainable
operations and can help to develop tailor-made digital options for customers and society,
even for developing countries. In parallel, the organization’s leadership should also con-
sider ecosystem development through learning from existing data, literature and experi-
ences. Therefore, working together for transparency and traceability improvement using
blockchain and Internet of Things technologies can help to implement ESG effectively.

6 Future importance and perspective of ESG

Although several publications have presented various aspects of ESG, many should be con-
sidered in future studies. The ESG considerations reflect five key areas: (1) constancy, com-
parison, and quality of related metrics; (2) confirming compliance with financial reporting;
(3) measuring the ESG disclosure platform and ratings for all; (4) transparency and com-
parative analysis of recognized ESG rating agencies and indicators; and (5) communication
by ESG product labeling (Boffo & Patalano, 2020). Policymakers can move forward with
regulatory reforms to strengthen sustainable business processes in several ways, includ-
ing taxes to clarify the definition, disclosure of ESG issuers across all business entities,
disclosure of ESG funds, rating agencies, and rating disclosure (Brooks & Oikonomou,
2018; Oncioiu et al., 2020). To improve data acquisition and analysis, a greater focus on
financial market contributors, policymakers, and other stakeholders is required to reinforce
ESG performance. Mixed evidence relating to the relative performance of high-perfor-
mance ESG portfolios compared to conventional groups increases the need to comprehen-
sively evaluate how business stability is perceived in ESG ratings and data. Moreover, the
blockchain-based platform can provide better data interoperability, maintain privacy and
eliminate transparency risks as tested in health care organizations (Abbate et al., 2022);
therefore, it can be helpful in future studies.
Researchers have suggested an ESG bias favoring big businesses over small and
medium enterprises (SMEs) (Orlitzky, 2001; Akgun et al., 2021). This is a key problem for
SMEs because large companies can provide greater funds for reporting and communica-
tion services, helping improve their ability to produce consistent data and metrics. How-
ever, this bias and the barrier to unlocking valuable ESG data for small businesses cause
market inefficiencies that affect estimated financial costs and reputation (Akgun et al.,
2021). Removing this deficiency will ensure that SMEs worldwide can successfully access
low-cost funding. Encouraging visibility and comparison of scoring methods and weights
among providers of standard ESG ratings and indicators should be considered in future
studies. The development of ESG processes requires significant international collaboration
among policymakers, the financial industry, end-to-end investors, and other stakeholders
who assist in shaping them. Although there has been progress in improving ESG processes
by several ESG providers and regulators, this has emphasized the perseverance of maturity
and a lack of comparative risk. More studies are required globally to confirm ESG progress
without any market disintegration and to raise stakeholder confidence and market integrity.

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Environmental‑, social‑, and governance‑related factors…

7 Conclusion

This article summarizes ESG factors that affect businesses, including environmental sus-
tainability, pollution and waste, greenhouse gas emissions, social factors, CSR, global
pandemics, religion, gender, political influence, organizational structure, and ownership.
Economic and administrative aspects include ESG disclosure, sustainable governance,
governing body and business size, economic performance, restructuring and investment,
corporate governance, internal and corporate employment, shareholder rights, stakeholder
selection, and technical development. Research findings published in more than 80 articles
were analyzed after a systematic review of the literature. This study contributes to the iden-
tification of sustainable business performance by reviewing several sustainability indica-
tors. Economic, social, and governance concepts are widely used in the literature to analyze
corporate sustainability. Increasing ESG adoption worldwide has proved its use in assess-
ing business performance. There is evidence that ESG disclosure—environment, economic
performance, and social sustainability—in the business sector can enhance the sustainabil-
ity and performance of businesses. Religion has a profound effect on performance, as it
has been revealed that firms labeled Islam work better for the environment and society but
not for governance. The size of the governing body, board, and independent directors has a
positive impact, whereas both women on the board and the CEO have a negative impact on
ESG disclosure. High ESG investment variability was observed during the COVID-19 era.
Adopting ESG policy outcomes enhances manufacturing capacity and the ability to pursue
innovation, value building, and financial performance. Overall, social and environmental
performance have demonstrated a positive relationship with economic stability, indicating
the interdependence between business value and the building of a value society. The ESG
bond (for all stakeholders) must be included as a competitive aspect of modern business.
This review highlights important information gaps and exciting questions that have not yet
been addressed, thus introducing a possible future research agenda for ESG. We also rec-
ognize that environmentally friendly processes and corporate social responsibility systems
are receiving greater attention to find sustainable competing businesses in the future. On
the other hand, shareholders, managers, and human rights play vital roles in determining
ESG performance in developing countries. Therefore, managers should focus on these indi-
cators to improve the efficiency and effectiveness of the firms. The sustainability points
provided by various reference providers should be considered for a comparative analysis in
future studies. Industrial segregation can lead to highly detailed results, another avenue for
future research. Test methods can be used to collect baseline data from industries, and cur-
rent research can be considered in the future to compare similar results.
Acknowledgements This research was supported by a National Research Foundation of Korea (NRF) grant
(NRF-2021R1I1A1A01057831) from the Korean government (MSIT).

Data availability Data analyzed in the current study are openly available in the literature, and the authors
confirm that the data supporting the findings of this study are available within the article.

Declarations
Conflict of interest The authors declare no conflicts of interest.

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