ESG Assessment and Stock Performance: A Systematic Literature Review and Research Agenda

Abstract

This is a systematic literature review that summarizes 571 empirical and methodological studies that studied the implications of Environmental, Social, and Governance (ESG) assessment of stock performance and investment choices between the year 2000 and 2025. We examine the multidimensional associations between ESG integration and financial performance in developed and emerging markets through the application of a strict scoping methodology, including citation chaining and relevance scoring. We find that the association between ESG performance and stock returns is more positive or neutral in nature, with the environmental factors proving to have more direct and consistent financial gains, whereas social and governance effects are even more context dependent. An important observation is the lack of regional homogeneity: developed markets have much more robust ESG-financial performance associations, and emerging markets encounter difficulties associated with data quality, regulatory frameworks, and institutional gaps in governance. The review of crisis periods, especially the analysis of the COVID-19 pandemic, highlights the importance of ESG in increasing the resilience of stocks and reducing downside risk. But the inconsistency of methods used to measure ESG, differences between ratings across agencies, and insufficient longitudinal studies limit causal inference. Our six research priorities are standardization of ESG measures, the identification of causes and effects that are disaggregated, the dynamics of emerging markets, long-term horizon research, and validation of artificial intelligence integration. This survey offers investors, corporate managers, and policymakers a general framework of how ESG has a complex and context-specific impact on investment performance and suggests a systematic agenda towards the promotion of sustainable finance research.