GREEN FINANCE AND ESG INTEGRATION: PATHWAYS TO ENVIRONMENTAL PERFORMANCE AND CARBON NEUTRALITY

Abstract

Growing global demands for sustainability and carbon neutrality have made green finance and ESG integration key issues on the sustainable development agenda. However, most research still addresses these two topics separately, resulting in a limited understanding of their combined impact on environmental performance and carbon neutrality. This study aims to identify research developments, map key themes, and construct a conceptual framework explaining the relationship between green finance, ESG integration, environmental performance, and carbon neutrality. This study employs a Systematic Literature Review (SLR) combined with bibliometric analysis of 33 Scopus-indexed articles from 2020 to 2025, selected in accordance with the PRISMA 2020 guidelines, and analysed using Biblioshiny in R Studio. The results indicate that publications have increased rapidly in recent years, but are still dominated by research from China, suggesting opportunities to develop similar research in developing countries, including Indonesia. Bibliometric mapping identified greenwashing, carbon emissions, and financial systems as the most dominant themes in the literature, whilst ESG integration and sustainable finance emerged as rapidly growing areas of study. The literature synthesis indicates that green credit, carbon trading, and green funds have a direct and measurable environmental impact compared to conventional green bonds. This study demonstrates that the relationship between green finance instruments, ESG integration, environmental performance, and carbon neutrality forms an integrated pathway framework that identifies institutional quality, firm characteristics, industry type, and regional conditions as key moderating factors, whilst positioning greenwashing as a systemic risk that may reduce the effectiveness of green finance and ESG implementation in driving the transition towards a low-carbon economy.