ESG and Firm Performance in Indian Companies: a Systematic Review and Research Agenda

Abstract

Environmental, Social and Governance (ESG) considerations have become important determinants of corporate strategy, investment decisions, risk management and firm valuation. In India, the importance of ESG has increased substantially following the introduction of the Securities and Exchange Board of India’s Business Responsibility and Sustainability Reporting (BRSR) framework. The top 1,000 listed entities were required to adopt BRSR reporting from financial year 2022–23, while BRSR Core assurance has been introduced through a phased implementation process.

This article systematically reviews the relationship between ESG performance and firm performance in Indian companies. It examines how environmental management, social responsibility and governance quality influence accounting performance, market value, cost of capital, risk, reputation and long-term competitiveness. The article follows a structured systematic-review approach informed by PRISMA 2020 principles, which promote transparent reporting of search, selection and synthesis procedures. The review indicates that ESG is generally associated with non-negative or positive firm-performance outcomes, although the strength and direction of the relationship vary according to industry, firm size, measurement method, time horizon and the quality of ESG disclosures.

The article also identifies important research gaps, including limited longitudinal evidence from the post-BRSR period, inconsistent ESG measurement, insufficient attention to small and mid-sized companies, weak integration of assurance quality, and limited research on causal mechanisms. A research agenda is proposed using panel-data methods, quasi-experimental designs, machine learning, sector-specific analysis and standardized BRSR-based indicators.