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The Diversity of Environmental, Social, and Governance Aspects in Sustainability: A Systematic Literature Review

Author

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  • Attila Jámbor

    (Institute of Sustainable Development, Corvinus University of Budapest, Fővám tér 8, 1093 Budapest, Hungary)

  • Anett Zanócz

    (Department of Accounting, Corvinus University of Budapest, Fővám tér 8, 1093 Budapest, Hungary)

Abstract

Significant emphasis has recently been placed on measuring companies from a sustainability perspective by environmental, social, and governance (ESG) scores, resulting in a considerable amount of financial, accounting, business, and management research on the subject. We provide a concise and harmonized systematic literature review of the current trends within this area for a broader range of academic researchers and practitioners. This work comprehensively explains ESG ratings, scores, and reports and aims to summarize how CSR activities are accounted for as non-financial information. The review aims to provide information and a better understanding of the complexity of corporate ESG aspects for those interested in this area. The results suggest that diverse methodologies, subjective elements, and some complexity of ESG measurement exist, leading to companies unconsciously using ESG ratings based on incorrect measures. Scoring methodologies are controversial, highlighting the need for more certainty about the validity of the ratings. ESG ratings need more reliability, and ESG reports do not help increase credibility, transparency, or accountability. Greenwashing emerges from loose regulation, measurement complexity, and the absence of transparency, emphasizing the need for more auditing and regulations in sustainability reporting and rating. Our results also demonstrate that ESG reporting is an ever-growing issue in sustainability and finances, and regulators must focus on it. Inconsistencies and uncertainties exist in ESG ratings and reporting; therefore, education is needed for decision-makers to understand better how this emerging topic works in practice.

Suggested Citation

  • Attila Jámbor & Anett Zanócz, 2023. "The Diversity of Environmental, Social, and Governance Aspects in Sustainability: A Systematic Literature Review," Sustainability, MDPI, vol. 15(18), pages 1-15, September.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:18:p:13958-:d:1243943
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    References listed on IDEAS

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    1. Céline LOUCHE & Guillaume DELAUTRE & Gabriela BALVEDI PIMENTEL, 2023. "Assessing companies' decent work practices: An analysis of ESG rating methodologies," International Labour Review, International Labour Organization, vol. 162(1), pages 69-97, March.
    2. Bofinger, Yannik & Heyden, Kim J. & Rock, Björn, 2022. "Corporate social responsibility and market efficiency: Evidence from ESG and misvaluation measures," Journal of Banking & Finance, Elsevier, vol. 134(C).
    3. Rocío Redondo Alamillos & Frédéric de Mariz, 2022. "How Can European Regulation on ESG Impact Business Globally?," JRFM, MDPI, vol. 15(7), pages 1-19, June.
    4. Jieun Chung & Charles H. Cho, 2018. "Current Trends within Social and Environmental Accounting Research: A Literature Review," Accounting Perspectives, John Wiley & Sons, vol. 17(2), pages 207-239, June.
    5. Rezaee, Zabihollah & Homayoun, Saeid & Poursoleyman, Ehsan & Rezaee, Nick J., 2023. "Comparative analysis of environmental, social, and governance disclosures," Global Finance Journal, Elsevier, vol. 55(C).
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