The Effect of Environmental, Social, and Governance Reporting on Corporate Financial Performance

Environmental, Social, and Governance (ESG) reporting has become a central mechanism through which firms communicate sustainability performance, governance quality, risk exposure, and long-term value creation. This structured literature review examines how ESG reporting affects corporate financial performance by synthesizing evidence on ESG disclosure, sustainability performance, controversies, governance, audit quality, internal controls, artificial intelligence, accounting information systems, fintech, dividend policy, cash holdings, and banking performance. The review indicates that ESG reporting is generally associated with stronger profitability, market valuation, investor confidence, stakeholder trust, access to finance, and financial resilience when disclosure is material, credible, comparable, and supported by governance and assurance mechanisms. However, the relationship is conditional rather than automatic. Financial benefits depend on disclosure quality, ESG rating divergence, greenwashing risk, industry materiality, institutional enforcement, board oversight, internal controls, audit quality, digital reporting infrastructure, and managerial capacity. The study contributes by reframing ESG reporting as an integrated value-creation architecture rather than a narrow sustainability disclosure practice.

ESG reporting; corporate financial performance; sustainability disclosure; corporate governance; ESG assurance.

1. Abdi, Y., Li, X., & Càmara-Turull, X., "Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: The moderating role of size and age," Environmental Development and Sustainability. Advance online publication, 2022. [Google Scholar] [Crossref]

2. https://doi.org/10.1007/s10668-021-01649-w [Google Scholar] [Crossref]

3. Ahmad, N., Mobarek, A., & Roni, N. N., "Revisiting the impact of ESG on financial performance of FTSE350 UK firms: Static and dynamic panel data analysis," Cogent Business & Management, 8(1), Article 1900500, 2021. https://doi.org/10.1080/23311975.2021.1900500 [Google Scholar] [Crossref]

4. Aladwan, M., Alslaibi, N. A., Samara, H. H., & Alsinglawi, O. (2026). Artificial Intelligence: The Secret Weapon Against Financial Fraud. AI in Accounting, 195–206. https://doi.org/10.1108/978-1-80592-941-320261012 [Google Scholar] [Crossref]

5. Al-Alawnh, N. A. K., Hani, L. Y. B., Alnimer, R., Samara, H. H., Alawamreh, M. I., Al Astal, A. Y. M., & Alslaibi, N. A., "Bank financial performance through fintech innovation in Jordanian commercial banks," In R. El Khoury (Ed.), Strategic decision-making in dynamic business environments: Systems and control perspectives (pp. 735-748). Springer Nature Switzerland, 2026. https://doi.org/10.1007/978-3-032-07220-7_64 [Google Scholar] [Crossref]

6. Al-Khoury, A. F., Alastal, A. Y. M., Samara, H., Alslaibi, N. A., Abdulmuhsin, A. A., & Alqudah, M. Z., "The bibliometric landscape of emerging technology in the accounting information systems field," Cogent Business & Management, 12(1), Article 2573191, 2025. [Google Scholar] [Crossref]

7. https://doi.org/10.1080/23311975.2025.2573191 [Google Scholar] [Crossref]

8. Al-Shaer, H., "Sustainability reporting quality and post-audit financial reporting quality: Empirical evidence from the UK," Business Strategy and the Environment. Advance online publication, 2020. https://doi.org/10.1002/bse.2507 [Google Scholar] [Crossref]

9. Alareeni, B. A., & Hamdan, A., "ESG impact on performance of US S&P 500-listed firms," Corporate Governance: The International Journal of Business in Society, 20(7), 1409-1428, 2020. [Google Scholar] [Crossref]

10. https://doi.org/10.1108/CG-06-2020-0258 [Google Scholar] [Crossref]

11. Aljarrah, A. H., & Alslaibi, N. A., "The influence of board of directors characteristics on audit quality," Global Business & Finance Review, 30(4), Article 110, 2025. [Google Scholar] [Crossref]

12. https://doi.org/10.17549/gbfr.2025.30.4.110 [Google Scholar] [Crossref]

13. Aljawarneh, N. M., Al Daabseh, T. K. I., Alomari, K. A. K., Alazzam, F. A. F., Alqudah, M. Z., Alslaibi, N. A., & Al Momani, M. A. H., "Innovation under the unique pressures of energy transition: Can CSR strategy buffer ESG controversies in EU firms? International Journal of Energy Economics and Policy, 16(2), 407-416," 2026. https://doi.org/10.32479/ijeep.22242 [Google Scholar] [Crossref]

14. Alslaibi, M. N., & Daraghma, Z., "The enchantment of board features: A captivating exploration into their influence on audit quality," Kurdish Studies, 10(2), 321-331, 2022. [Google Scholar] [Crossref]

15. https://doi.org/10.53555/ks.v12i3.2864 [Google Scholar] [Crossref]

16. Alslaibi, N. A., "Cracking the code: Unveiling dividend policy factors in Palestine's stock exchange (PEX)," Edelweiss Applied Science and Technology, 8(5), 2363-2376, 2024. [Google Scholar] [Crossref]

17. https://doi.org/10.55214/25768484.v8i5.2004 [Google Scholar] [Crossref]

18. Alslaibi, N. A., "Testing sustainable solutions: Analyzing the impact of fintech on profitability before and during COVID in Palestine banking sector," Global Business & Finance Review, 29(10), Article 94, 2024. https://doi.org/10.17549/gbfr.2024.29.10.94 [Google Scholar] [Crossref]

19. Alslaibi, N. A. (2026). Board cultural and gender diversity and ESG pillar performance: evidence from European listed firms. Discover Sustainability. https://doi.org/10.1007/s43621-026-03996-y [Google Scholar] [Crossref]

20. Alslaibi, N. A. R., "The profitability symphony: Orchestrating success with banks internal factors and the moderating role of corporate governance: Insights from Palestine [Doctoral dissertation, Arab American University].," 2025. [Google Scholar] [Crossref]

21. Alslaibi, N. A., Alshdaifat, S. M., Bani Hani, L. Y., Abu Farha, E. K. K., & Alhasnawi, M. Y., "Artificial intelligence and financial statement transparency: The moderating role of accounting information systems' reliability," EDPACS. Advance online publication, 2025. [Google Scholar] [Crossref]

22. https://doi.org/10.1080/07366981.2025.2586486 [Google Scholar] [Crossref]

23. Alslaibi, N. A., Qawasmeh, R., Samara, H., & Abualrob, R. M., "Key drivers of bank financial performance: Insights from the Arab Levant region," Banks and Bank Systems, 20(2), 143-155, 2025. https://doi.org/10.21511/bbs.20(2).2025.12 [Google Scholar] [Crossref]

24. Alslaibi, N. A., Samara, H. H., Hussein, A. I., & Hussein, W. N., "The role of environmental management teams in linking board characteristics to sustainability performance: Evidence from the GCC," Management & Sustainability: An Arab Review. Advance online publication, 2025. [Google Scholar] [Crossref]

25. https://doi.org/10.1108/MSAR-12-2024-0233 [Google Scholar] [Crossref]

26. Alslaibi, N., & Abdelkarim, N., "The power of ESG factors in driving financial growth: Insights from Palestine," Discover Sustainability, 5, Article 241, 2024. https://doi.org/10.1007/s43621-024-00430-z [Google Scholar] [Crossref]

27. Alslaibi, N., Daraghma, Z., Saad, R., Ghannam, H., & Costantini, H., "When experience shapes control: The moderating role of employee tenure in COSO-based fraud prevention," EDPACS. Advance online publication, 2026. https://doi.org/10.1080/07366981.2026.2633868 [Google Scholar] [Crossref]

28. Alslaibi, N., Qawasmeh, R., Daraghma, Z., Abdelkarim, N., & Paz, V., "The behavioral-governance fit theory: Orchestrating profitability through internal dynamics and corporate governance in Palestinian banks," Journal of Cultural Analysis and Social Change, 11(1), 771-791, 2026. [Google Scholar] [Crossref]

29. https://doi.org/10.64753/jcasc.v11i1.3955 [Google Scholar] [Crossref]

30. Amarna, A. H., Razzaqi, H. A., Ateeq, A., Bani Hani, L. Y., Alslaibi, N. A., & Al Astal, A. Y. M., "Corporate governance and firm performance in emerging markets: Investigating the moderating role of artificial intelligence," In 2025 International Conference on Computer and Applications (ICCA) (pp. 1-6). IEEE, 2025. https://doi.org/10.1109/ICCA66035.2025.11430908 [Google Scholar] [Crossref]

31. Atan, R., Alam, M. M., Said, J., & Zamri, M., "The impacts of environmental, social, and governance factors on firm performance: Panel study of Malaysian companies," Management of Environmental Quality: An International Journal, 29(2), 182-194, 2018. https://doi.org/10.1108/MEQ-03-2017-0033 [Google Scholar] [Crossref]

32. Aydoğmuş, M., Gülay, G., & Ergun, K., "Impact of ESG performance on firm value and profitability," Borsa Istanbul Review, 22(Suppl. 2), S119-S127, 2022. https://doi.org/10.1016/j.bir.2022.11.006 [Google Scholar] [Crossref]

33. Bakarich, K. M., Castonguay, J. 'Jack', & O'Brien, P. E., "The use of blockchains to enhance sustainability reporting and assurance," Accounting Perspectives, 19(4), 389-412, 2020. [Google Scholar] [Crossref]

34. https://doi.org/10.1111/1911-3838.12241 [Google Scholar] [Crossref]

35. Berg, F., Kölbel, J. F., & Rigobon, R., "Aggregate confusion: The divergence of ESG ratings," Review of Finance, 26(6), 1315-1344, 2022. https://doi.org/10.1093/rof/rfac033 [Google Scholar] [Crossref]

36. Bolton, P., & Kacperczyk, M., "Do investors care about carbon risk? Journal of Financial Economics, 142(2), 517-549," 2021. https://doi.org/10.1016/j.jfineco.2021.05.008 [Google Scholar] [Crossref]

37. Bu, M., Liu, X., & Zhang, B., "Governance of corporate greenwashing through ESG assurance," Systems, 12(9), Article 365, 2024. https://doi.org/10.3390/systems12090365 [Google Scholar] [Crossref]

38. Buallay, A., "Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector," Management of Environmental Quality: An International Journal, 30(1), 98-115, 2019. https://doi.org/10.1108/MEQ-12-2017-0149 [Google Scholar] [Crossref]

39. Carè, R., Agnese, P., & Cerciello, M., "Does it pay off to disclose sustainability information? The effect of ESG disclosure on ESG controversies in European banks," Business Strategy and the Environment. Advance online publication, 2025. https://doi.org/10.1002/bse.4150 [Google Scholar] [Crossref]

40. Cepêda, C., Monteiro, A. P., & Aibar-Guzmán, B., "Bridging the ESG credibility gap: The role of institutional investors in mitigating ESG decoupling," Business Strategy and the Environment. Advance online publication, 2025. https://doi.org/10.1002/bse.4336 [Google Scholar] [Crossref]

41. Chen, C. H., Luu, B. V., & Yu, E. P.-Y., "Greenwashing in environmental, social and governance disclosures," Research in International Business and Finance, 52, Article 101192, 2020. [Google Scholar] [Crossref]

42. https://doi.org/10.1016/j.ribaf.2020.101192 [Google Scholar] [Crossref]

43. Chen, Z., & Xie, G., "ESG disclosure and financial performance: Moderating role of ESG investors," International Review of Financial Analysis, 83, Article 102291, 2022. [Google Scholar] [Crossref]

44. https://doi.org/10.1016/j.irfa.2022.102291 [Google Scholar] [Crossref]

45. Christensen, D. M., Serafeim, G., & Sikochi, A., "Why is corporate virtue in the eye of the beholder? The case of ESG ratings," The Accounting Review, 97(1), 147-175, 2022. [Google Scholar] [Crossref]

46. https://doi.org/10.2308/TAR-2019-0506 [Google Scholar] [Crossref]

47. Christensen, H. B., Hail, L., & Leuz, C., "Mandatory CSR and sustainability reporting: Economic analysis and literature review," Review of Accounting Studies, 26, 1176-1248, 2021. [Google Scholar] [Crossref]

48. https://doi.org/10.1007/s11142-021-09609-5 [Google Scholar] [Crossref]

49. Elaigwu, M., Abdulmalik, S. O., & Talab, H. R., "Corporate integrity, external assurance and sustainability reporting quality: Evidence from the Malaysian public listed companies," Asia-Pacific Journal of Business Administration. Advance online publication, 2022. https://doi.org/10.1108/APJBA-07-2021-0307 [Google Scholar] [Crossref]

50. Erin, O., Adegboye, A., & Bamigboye, O. A., "Corporate governance and sustainability reporting quality: Evidence from Nigeria," Sustainability Accounting, Management and Policy Journal. Advance online publication, 2022. https://doi.org/10.1108/SAMPJ-06-2020-0185 [Google Scholar] [Crossref]

51. Feng, Z., & Wu, Z., "ESG disclosure, REIT debt financing and firm value," The Journal of Real Estate Finance and Economics. Advance online publication, 2023. https://doi.org/10.1007/s11146-021-09857-x [Google Scholar] [Crossref]

52. Flammer, C., "Corporate green bonds," Journal of Financial Economics, 142(2), 499-516, 2021. [Google Scholar] [Crossref]

53. https://doi.org/10.1016/j.jfineco.2021.01.010 [Google Scholar] [Crossref]

54. Friede, G., Busch, T., & Bassen, A., "ESG and financial performance: Aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, 5(4), 210-233, 2015. https://doi.org/10.1080/20430795.2015.1118917 [Google Scholar] [Crossref]

55. Gerwing, T., Kajüter, P., & Wirth, M., "The role of sustainable corporate governance in mandatory sustainability reporting quality," Journal of Business Economics. Advance online publication, 2022. https://doi.org/10.1007/s11573-022-01092-x [Google Scholar] [Crossref]

56. Ghitti, M., Gianfrate, G., & Palma, L., "The agency of greenwashing," Journal of Management and Governance. Advance online publication, 2024. https://doi.org/10.1007/s10997-023-09683-8 [Google Scholar] [Crossref]

57. Gillan, S. L., Koch, A., & Starks, L. T., "Firms and social responsibility: A review of ESG and CSR research in corporate finance," Journal of Corporate Finance, 66, Article 101889, 2021. [Google Scholar] [Crossref]

58. https://doi.org/10.1016/j.jcorpfin.2021.101889 [Google Scholar] [Crossref]

59. Hartzmark, S. M., & Sussman, A. B., "Do investors value sustainability? A natural experiment examining ranking and fund flows," The Journal of Finance, 74(6), 2789-2837, 2019. [Google Scholar] [Crossref]

60. https://doi.org/10.1111/jofi.12841 [Google Scholar] [Crossref]

61. Isack, M., & Aschauer, E., "The role of CSR report assurance and ESG rating in bank manager's judgement on ESG lending decisions," International Journal of Auditing. Advance online publication, 2025. https://doi.org/10.1111/ijau.12369 [Google Scholar] [Crossref]

62. Jiang, Z., & Vitenu-Sackey, P. A., "Assessing the impact of environmental, social and governance indicators on corporate financial performance," SAGE Open, 15(3), 2025. [Google Scholar] [Crossref]

63. https://doi.org/10.1177/21582440251361179 [Google Scholar] [Crossref]

64. Khan, M., Serafeim, G., & Yoon, A., "Corporate sustainability: First evidence on materiality," The Accounting Review, 91(6), 1697-1724, 2016. https://doi.org/10.2308/accr-51383 [Google Scholar] [Crossref]

65. Kim, S., & Kim, K., "The compounding effect of mandatory GHG emissions disclosure and voluntary ESG disclosure on firm value in Korea," Journal of Asian Business and Economic Studies. Advance online publication, 2024. https://doi.org/10.1108/JABES-12-2023-0519 [Google Scholar] [Crossref]

66. Krueger, P., Sautner, Z., & Starks, L. T., "The importance of climate risks for institutional investors," The Review of Financial Studies, 33(3), 1067-1111, 2020. https://doi.org/10.1093/rfs/hhz137 [Google Scholar] [Crossref]

67. Latiff, A. R., Alqudah, M. Z., Samara, H., & others., "Empowering the financial sector: The role of fintech research development trends," Future Business Journal, 11, Article 92, 2025. [Google Scholar] [Crossref]

68. https://doi.org/10.1186/s43093-025-00512-y [Google Scholar] [Crossref]

69. Luque-Vílchez, M., Cordazzo, M., Rimmel, G., & Tilt, C. A., "Key aspects of sustainability reporting quality and the future of GRI," Sustainability Accounting, Management and Policy Journal. Advance online publication, 2023. https://doi.org/10.1108/SAMPJ-03-2023-0127 [Google Scholar] [Crossref]

70. López-de-Silanes, F., McCahery, J. A., & Pudschedl, P. C., "Institutional investors and ESG preferences," Corporate Governance: An International Review. Advance online publication, 2024. https://doi.org/10.1111/corg.12583 [Google Scholar] [Crossref]

71. Ma, Y., Feng, G.-F., & Yin, Z., "ESG disclosures, green innovation, and greenwashing: All for sustainable development? Sustainable Development," Advance online publication, 2024. https://doi.org/10.1002/sd.3210 [Google Scholar] [Crossref]

72. Mao, Z., Wang, S., & Lin, Y.-E., "ESG, ESG rating divergence and earnings management: Evidence from China," Corporate Social Responsibility and Environmental Management. Advance online publication, 2024. https://doi.org/10.1002/csr.2748 [Google Scholar] [Crossref]

73. Naveed, K., Farooq, M. B., & Zahir-ul-Hassan, M. K., "AI adoption, ESG disclosure quality and sustainability committee heterogeneity: Evidence from Chinese companies," Meditari Accountancy Research. Advance online publication, 2025. https://doi.org/10.1108/MEDAR-02-2024-2374 [Google Scholar] [Crossref]

74. Ottenstein, P., Erben, S., Jost, S., Weuster, C. W., & Zülch, H., "From voluntarism to regulation: Effects of Directive 2014/95/EU on sustainability reporting in the EU," Journal of Applied Accounting Research. Advance online publication, 2022. https://doi.org/10.1108/JAAR-03-2021-0075 [Google Scholar] [Crossref]

75. Page, M. J., McKenzie, J. E., Bossuyt, P. M., Boutron, I., Hoffmann, T. C., Mulrow, C. D., Shamseer, L., Tetzlaff, J. M., Akl, E. A., Brennan, S. E., Chou, R., Glanville, J., Grimshaw, J. M., Hróbjartsson, A., Lalu, M. M., Li, T., Loder, E. W., Mayo-Wilson, E., McDonald, S., ... Moher, D., "The PRISMA 2020 statement: An updated guideline for reporting systematic reviews," BMJ, 372, Article n71, 2021. https://doi.org/10.1136/bmj.n71 [Google Scholar] [Crossref]

76. Petruzzelli, S., & Badia, F., "The quality assessment of stakeholder engagement disclosure in the EU mandatory non-financial reporting framework," Journal of Applied Accounting Research. Advance online publication, 2024. https://doi.org/10.1108/JAAR-11-2022-0290 [Google Scholar] [Crossref]

77. Pizzi, S., Caputo, A., & Venturelli, A., "Embedding and managing blockchain in sustainability reporting: A practical framework," Sustainability Accounting, Management and Policy Journal. Advance online publication, 2022. https://doi.org/10.1108/SAMPJ-07-2021-0288 [Google Scholar] [Crossref]

78. Postiglione, M., Carini, C., & Falini, A., "ESG and firm value: A hybrid literature review on cost of capital implications from Scopus database," Corporate Social Responsibility and Environmental Management. Advance online publication, 2024. https://doi.org/10.1002/csr.2940 [Google Scholar] [Crossref]

79. Qawasmeh, R., Samara, H., Alslaibi, N., Abu Farha, E. K. K., & Elamer, A. A., "Between virtue and risk: ESG dynamics and the strategic role of gender-diverse boards," Corporate Social Responsibility and Environmental Management. Advance online publication, 2026. https://doi.org/10.1002/csr.70500 [Google Scholar] [Crossref]

80. Radu, O.-M., Dragomir, V. D., & Hao, N., "Company-level factors of non-financial reporting quality under a mandatory regime: A systematic review of empirical evidence in the European Union," Sustainability, 15(23), Article 16265, 2023. https://doi.org/10.3390/su152316265 [Google Scholar] [Crossref]

81. Raimo, N., Vitolla, F., Marrone, A., & Rubino, M., "The impact of ESG disclosure on firm value and financial performance," Sustainability, 13(15), Article 8354, 2021. https://doi.org/10.3390/su13158354 [Google Scholar] [Crossref]

82. Raman, R., Nair, V. K., Shivdas, A., Bhukya, R., & Viswanathan, P. K., "Mapping sustainability reporting research with the UN's sustainable development goals," Heliyon, 9(7), Article e18510, 2023. https://doi.org/10.1016/j.heliyon.2023.e18510 [Google Scholar] [Crossref]

83. Ren, J. S., Wu, P., & Hou, L., "Social media attention and corporate greenwashing: Evidence from China," Corporate Social Responsibility and Environmental Management. Advance online publication, 2024. https://doi.org/10.1002/csr.2875 [Google Scholar] [Crossref]

84. Rezaee, Z., Homayoun, S., & Rezaee, N. J., "Business sustainability reporting and assurance and sustainable development goals," Managerial Auditing Journal. Advance online publication, 2023. https://doi.org/10.1108/MAJ-10-2022-3722 [Google Scholar] [Crossref]

85. Samara, H. H., Bazbaz, A., Alslaibi, N. A., Abu Farha, E. K. K., & Kharoub, T., "Accounting culture and the quality of financial reporting: Corporate governance as a moderator in Palestinian and Jordanian banking sectors," EDPACS. Advance online publication, 2025. [Google Scholar] [Crossref]

86. https://doi.org/10.1080/07366981.2025.2581362 [Google Scholar] [Crossref]

87. Samara, H., Alshdaifat, S. M., Abusharbeh, M., Alslaibi, N. A., & Alqudah, M. Z., "Cash is sovereign: ESG performance, cash holdings and the strategic influence of gender-diverse boards in Europe," EuroMed Journal of Business. Advance online publication, 2026. https://doi.org/10.1108/EMJB-06-2025-0221 [Google Scholar] [Crossref]

88. Singhania, S., & Singh, J., "Board gender diversity and sustainability reporting quality: A generalized ordered logit approach," Kybernetes. Advance online publication, 2023. https://doi.org/10.1108/K-07-2022-0963 [Google Scholar] [Crossref]

89. Velte, P., "Does ESG performance have an impact on financial performance? Evidence from Germany," Journal of Global Responsibility, 8(2), 169-178, 2017. https://doi.org/10.1108/JGR-11-2016-0029 [Google Scholar] [Crossref]

90. Wong, W. C., Batten, J. A., Ahmad, A. H., Mohamed-Arshad, S. B., Nordin, S., & Adzis, A. A., "Does ESG certification add firm value? Finance Research Letters, 39, Article 101593," 2021. https://doi.org/10.1016/j.frl.2020.101593 [Google Scholar] [Crossref]

91. Xie, G., Nozawa, W., Yagi, M., Fujii, H., & Managi, S., "Do environmental, social, and governance activities improve corporate financial performance? Business Strategy and the Environment, 28(2), 286-300," 2019. https://doi.org/10.1002/bse.2224 [Google Scholar] [Crossref]

92. Zhu, F., & Zheng, Z., "The disclosure fog: Institutional investors and corporate greenwashing," International Journal of Finance & Economics. Advance online publication, 2025. [Google Scholar] [Crossref]

93. https://doi.org/10.1002/ijfe.3096 [Google Scholar] [Crossref]

• Assessment of the Role of Artificial Intelligence in Repositioning TVET for Economic Development in Nigeria
• Teachers’ Use of Assure Model Instructional Design on Learners’ Problem Solving Efficacy in Secondary Schools in Bungoma County, Kenya
• “E-Booksan Ang Kaalaman”: Development, Validation, and Utilization of Electronic Book in Academic Performance of Grade 9 Students in Social Studies
• Analyzing EFL University Students’ Academic Speaking Skills Through Self-Recorded Video Presentation
• Major Findings of The Study on Total Quality Management in Teachers’ Education Institutions (TEIs) In Assam – An Evaluative Study