A review of recent developments in ESG and corporate finance

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides a synthesized framework of ESG transmission channels and identifies boundary conditions for future empirical work.

🏢実務担当者:Offers evidence on ESG's impact on cost of capital and risk mitigation, useful for sustainability strategy and disclosure.

The integration of Environmental, Social, and Governance (ESG) considerations into corporate finance has generated extensive yet fragmented research. Existing findings are heterogeneous, and causal claims are often undermined by measurement noise, selection bias, and pronounced ESG rating divergence. This lack of consensus obscures the mechanisms through which ESG affects firm value. To address this gap, this paper reviews recent developments by organizing evidence around five transmission channels: information, risk management, stakeholder relations, innovation, and capital allocation. Focusing on studies with credible identification, the review synthesizes findings on financial performance, cost of capital, climate risk, disclosure, governance, and engagement. The analysis reveals that ESG value creation is conditional, depending systematically on industry materiality, governance quality, and institutional context. The most robust evidence supports ESG's role in reducing financing costs and mitigating tail risks, while evidence of persistent alpha remains mixed. By clarifying boundary conditions and mechanisms, this review provides an integrated framework that reconciles prior inconsistencies. The paper concludes with implications for managers, investors, and policymakers and outlines promising frontiers in climate finance and machine-learning-based measurement. This synthesis thus offers a structured foundation for future theoretical and empirical inquiry.

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