Corporate Governance and ESG Performance: A Literature Review

This thesis examines the role of corporate governance in enhancing Environmental, Social, and Governance (ESG) performance, emphasizing its importance in business sustainability and stakeholder value creation. A systematic literature review of articles from top journals in business management, economics, accounting, and finance over the past 20 years dissects how corporate governance mechanisms influence ESG outcomes. Key findings reveal trends such as increased board diversity and linking executive compensation to ESG targets, significantly impacting ESG performance. The study highlights the correlation between robust governance frameworks and superior ESG outcomes, with notable differences across geographical regions and sectors. The findings offer theoretical and practical implications, guiding companies, policymakers, and leaders in enhancing governance frameworks to support sustainable development. It further identifies gaps, particularly in understanding causality and the impact of digital transformation on governance and ESG performance. It suggests future research directions to explore these aspects further and address the disparity in the literature on social sustainability.