Directions for Future Research to Steer Environment, Social and Governance (ESG) Investing to Support Sustainability: A Systematic Literature Review

Abstract

This chapter provides an overview of the state of the literature on investment practices that. consider environmental, social and governance (ESG) factors. Such investing practices are commonly known as socially responsible investing (SRI), impact investing or sustainable investing. The literature review includes 96 journal articles on ESG investing published between 2009 and May 2021. The review shows that ESG investing research is growing, multidisciplinary, dominated by studies adopting quantitative (mainly archival) methods and concentrated in the developed markets (particularly North America and Europe). The four broad strands of research identified in the ESG investing literature are (1) investor behaviour in relation to ESG investing, (2) ESG investing strategies, (3) performance and characteristics of ESG-focused funds and portfolios and (4) ESG ratings. We show several ways future research on ESG investing could be directed towards developing the knowledge necessary to steer investing and corporate practices to support planetary sustainability.

Keywords: Environmental, social and governance (ESG) factors, socially responsible investing, sustainability, systematic literature review