ESG, innovation, and financial performance: a systematic literature review

Toward a Multi-Dimensional ESG Framework for Enhancing Firm Value in Commercial Banks: A Systematic Literature Review

Environmental, Social, and Governance (ESG) has become a prominent issue in the banking sector due to the increasing emphasis on sustainability and responsible finance. This study aims to systematically review the literature on the relationship between ESG and firm value in the banking sector and identify research trends, gaps, and future research directions. The study follows the PRISMA guidelines for article identification and selection using the scopus database. In addition, bibliometric analysis was conducted using VOSviewer to map publication trends, dominant themes, and the intellectual structure of ESG and firm value research. The findings indicate a significant increase in publications during the 2020-2025 period, with major themes focusing on ESG, financial performance, corporate governance, and sustainability. ESG has been operationalized through various dimensions, including ESG disclosure, ESG performance, ESG score, sustainability reporting, and CSR expenditure. While most studies report a positive association between ESG and firm value, inconsistencies in findings and limited consideration of mediating and moderating variables remain evident. Therefore, this study proposes a Multi-Dimensional ESG Framework to guide future research and support the development of sustainable business practices in the banking industry.

THE EFFECT OF ESG DISCLOSURE ON FIRM VALUE: A SYSTEMATIC LITERATURE REVIEW

This systematic literature review critically examines the theoretical frameworks and empirical evidence linking Environmental, Social, and Governance (ESG) factors to corporate value by analyzing 20 articles that underwent title and abstract screening, followed by a narrative synthesis using thematic analysis. studies published between 2021 and 2025. Using a PRISMA-based methodology, this review identifies patterns of positive impacts, variations in results, and mediating and moderating factors affecting firm value. The synthesis results indicate that ESG disclosure tends to have a positive impact on firm value, as measured by Tobin’s Q, the market-to-book ratio, or market capitalization. This increase occurs primarily through reduced information asymmetry, enhanced reputation, and lower capital costs. Positive effects are more consistently observed in firms in emerging markets and within the governance dimension. Some studies have found a negative or insignificant relationship, particularly in the short term or in developed markets. Factors that strengthen this relationship include company size, sales growth, and competitive advantage. Meanwhile, mediators such as profitability and organizational visibility also play a role. High-quality ESG disclosures support long-term value creation when integrated with business strategy in a balanced manner. These findings provide a basis for companies to enhance the transparency of their ESG reporting to strengthen corporate value.

The impact of innovation on ESG performance

Purpose: The main objective of the paper is to explore how different types of innovations contribute to ESG performance in companies. The study aims to distinguish the specific effects of technological and organizational innovations on environmental, social, and governance dimensions, thereby clarifying their role in sustainable corporate development. Methodology: To achieve the research objective, data were collected from 113 companies in Serbia during 2025. Structural Equation Modelling was applied to examine the relationships between types of innovations and ESG performance dimensions, enabling a precise assessment of their individual impacts. Findings: The study confirms that innovations are essential for improving ESG performance. Technological innovations have the strongest impact on environmental outcomes, while organizational innovations are most influential in strengthening governance practices. Social performance is positively affected by both types of innovations, though to a lesser extent. Originality/value: This research provides novel insights into the differentiated effects of innovation types on ESG dimensions, contributing to the literature by linking innovation strategies with sustainability outcomes in a transitional economy context. It highlights the importance of distinguishing between technological and organizational innovations when evaluating ESG performance. Practical implications: The findings can help hotel managers and policymakers design innovation strategies that align with sustainability goals. Companies seeking to improve environmental outcomes should prioritize technological innovations, while those aiming to strengthen governance should focus on organizational innovations. These insights are particularly valuable for decision makers in emerging economies striving to balance competitiveness with ESG commitments. Limitations: The study is limited to companies operating in Serbia, which may restrict the generalizability of findings to other contexts. Additionally, the analysis is based on cross-sectional data collected in 2025, preventing the assessment of long-term innovation effects. Future research should expand to comparative international samples and longitudinal designs.

Innovation, Governance, and ESG: Impacts on the Economic-Financial Performance in Organizations

In emerging economies, integrating innovation, governance, and ESG criteria poses a strategic challenge, necessitating analyses that align these dimensions. This study, using data from 3483 observations of companies listed on B3 (2015-2022), examined the effects of these factors on economic-financial performance, alongside ESG’s role in mitigating CEO duality and promoting female board representation. Employing the Generalized Method of Moments (GMM), results revealed complex relationships: innovation positively impacted performance, solidifying its role as a competitive driver. CEO duality exhibited progressively negative effects, highlighting risks of power concentration. Female representation yielded ambiguous impacts, suggesting reliance on inclusion policies. ESG practices, though linked to operational costs and greenwashing in isolation, enhanced positive outcomes when combined with diversified boards, underscoring governance-sustainability synergies. Theoretically, the study integrated Stakeholder and Agency Theories, indicating ESG amplifies benefits in collaborative contexts but fails to offset governance gaps. Practically, it recommends balanced governance structures, separation of leadership roles, and gender diversity investments as strategic complements to ESG. Thus, the research underscores the relevance of multifaceted approaches for sustainable performance in emerging markets, offering insights into mitigating risks while leveraging innovation and governance synergies.

Unravelling the role of innovation and institutions in circular economy actions across European small‐ and medium‐sized enterprises

This study contributes to the literature on the circular economy (CE) and small‐ and medium‐sized enterprises (SMEs) by advancing both theory and empirical evidence on the role of contextual factors. Theoretically, it refines institutional and cultural contingency perspectives by showing that national innovation systems and societal norms do not uniformly enhance the effectiveness of financial support for CE adoption. Instead, these contextual factors shape the impact of public and private financial resources in an asymmetric and selective manner. By jointly considering formal institutions, such as a country's innovation level, and informal institutions, such as social indulgence, the study offers a more nuanced framework to explain cross‐country variation in SMEs' engagement with CE practices. Empirically, the study analyses Flash Eurobarometer data from 26 European Union countries collected in 2015, 2017 and 2021. The results indicate that greater public and private financial support is associated with higher levels of CE engagement among SMEs. In addition, the findings reveal that national innovation levels positively moderate the relationship between public financial support and CE actions, whereas social indulgence negatively moderates the relationship between public support and CE development. Overall, the study provides comparative evidence highlighting the importance of tailoring financial support policies to national institutional and cultural contexts.

Technological strategy, open innovation and performance: evidences by a structural- equation-model approach