Systematic literature review on financial performance as one of the main drivers towards sustainable investment
DOI:
https://doi.org/10.23925/2179-3565.2024v15i2p96-112Keywords:
Sustainable Investment, Financial Performance, ESG, Regulatory Demands, Drivers, JEL classification: D20, G20, Q01Abstract
As the global financial landscape is changing and sustainable investments are increasing in importance, it is important to delve into the finer details of sustainable investments. This systematic review is based on empirical and theoretical studies from the Scopus database, aimed to address the following research question: What are the key themes, financial implications, and drivers of sustainable investment. A total of 697 publications were reviewed between 2018 and 2023, there was an increase in sustainable investment studies over this period, indicating the growing relevance of sustainable investments. Most of these publications focused on the relationship between sustainable investments and financial performance, sidelining publications based on the driving forces and motivations behind sustainable investments. Key findings highlighted that firms that adopt sustainable practices improve their ethical standing, but also gain financially. The systematic review also highlights that there is a positive relationship between ESG and financial performance and that in the cases where a negative relationship was found, it was due to not enough institutional support for ESG initiatives. There is also an influence of internal factors and external pressures that act as a catalyst toward sustainable investments. However, as most publications focused on financial implications, as opposed to the drivers and motivations behind sustainable investments, there appears to be a gap in the literature. As sustainable investments continue to gain popularity among investors, a holistic research approach needs to be taken, which includes financial implications and investment motivations; this is crucial to help investors make informed decisions.
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