Impact of Green Finance on Firm Performance: A Systematic Review Following PRISMA Guidelines

Abstract

Research on green finance, ESG, and firm performance has grown quickly, but findings remain split across streams that treat green bonds, ESG ratings, and CSR disclosure as separate topics, each with its own outcome measures. Large-scale meta-analyses have already established that ESG is broadly associated with favorable financial outcomes. What remains unresolved is how, when, and under which institutional conditions this relationship holds. This review addresses that question through a PRISMA 2020 compliant systematic review of peer-reviewed empirical studies indexed in Scopus and Web of Science between January 2015 and May 2025. From 860 records identified, 81 studies met the inclusion criteria and were coded for ESG/CSR instruments, financial outcomes, contextual variables, and study characteristics. A co-occurrence analysis of extracted variables, conducted in RStudio, mapped the structural relationships between ESG dimensions, control variables, and performance indicators. 49% of studies report a positive ESG-performance relationship, 38% report conditional or context-dependent effects, and the remainder report neutral, mixed, or negative results. Three mechanisms recur across the corpus: innovation and productivity gains, improved financing conditions, and risk reduction through transparency. China accounts for the largest share of the corpus (17 studies), followed by Indonesia and South Africa (7 each); effects are not uniformly stronger in these settings, and institutional strength itself acts as a key moderator, with weaker enforcement environments sometimes associated with limited or reversed ESG-performance relationships. By tracing these mechanisms rather than testing a single average effect, the review moves the debate from whether ESG pays to how and under what conditions it does, giving managers, investors, and regulators a basis for setting priorities as sustainability disclosure requirements expand.

Classification JEL : Q56, G23, M14, G32, O16

Paper type: systematic literature review