SUSTAINABLE FINANCE AND DATA ANALYTICS: A SYSTEMATIC REVIEW OF ESG DATA IN INVESTMENT DECISIONS

Abstract

This systematic review investigates the role of Environmental, Social, and Governance (ESG) data in corporate financial performance and investment decision-making. Following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines, a total of 1,200 articles were initially identified, and through a rigorous screening process, 70 peer-reviewed studies were included in the final analysis. The review reveals significant findings on the positive correlation between high ESG scores and improved long-term financial returns, particularly during periods of market volatility such as the COVID-19 pandemic. Companies with strong ESG practices, especially in areas of environmental sustainability and corporate governance, demonstrated enhanced risk management capabilities and financial resilience. The study also highlights notable sectoral and geographical differences, where environmental factors had a more pronounced impact in high-risk industries like energy and manufacturing, and companies in regions with stricter ESG regulations, such as Europe, showed better financial outcomes. Furthermore, the growing role of AI and machine learning in ESG data collection and analysis is emphasized, as these technologies enable more accurate, real-time risk assessment and decision-making. However, challenges remain in the standardization of social and governance metrics, and there is a need for more longitudinal studies to fully understand the long-term impact of ESG practices. Overall, this review provides a comprehensive analysis of the current state of ESG research and its implications for sustainable corporate performance and investment strategies.