Environmental, Social and Governance (ESG)

This paper presents a Literature review of environmental, social, and governance by browsing several articles that researching the Environmental, Social and Governance (ESG). This paper reviews 25 papers published between 2021 and 2022. The stakeholder theory is widely used in research from previous studies on ESG. The 25 papers were published at the Q1 level from Scimagojr. Most studies conducted their studies by using quantitative methods that mostly used secondary data, especially from the Stock Exchange. However, some studies used the qualitative methods. The dominant discussion in these articles is ESG disclosure and also ESG performance. Therefore, future research suggests focusing on topics regarding ESG disclosure or ESG Performance. The next suggestion related to the methods used for future research is a qualitative method, for example, by conducting case studies and direct interviews with sources. The final suggestion for future research that is beneficial to all stakeholders.


Introduction
In recent years, consumers, investors, companies, and stakeholders have shifted their focus towards corporate sustainability, which is increasingly essential information (Melinda & Wardhani, 2020). Sustainability implies continuous and more improved well-being (environmental, social, and economic [ESG]) with the aim of future generations having a better quality of life than the current one (Dicuonzo et al., 2022). The demand for environmental, social and governance (ESG) disclosures has increased by stakeholders which may result in an increase in sustainability reporting including the goals of sustainable development or SDGs (de Silva Lokuwaduge et al., 2022). ESG initiatives broadly consist of environmental, social, and governance factors. First, environmental factors that refer to water use, energy use, conservation of natural resources, pollution, and carbon emissions by companies. It involves assessing environmental risks to the company's revenue and how the company manages those potential risks, for example, companies may face risks associated with wastewater disposal that have the potential to be fined for noncompliance. The second is a social factor that refers to the company's relationship with the community, for example safety, employee health, product safety and rights at work, and social philanthropy. If workplace health and safety is inadequate, it can eliminate risks including compliance costs and labor inefficiencies. Finally, governance factors include board independence, diversity, shareholder rights and information disclosure. Information needed by stakeholders and investors regarding conflicts of interest, the strength of governance structures and accounting transparency (Atif et al., 2022).
ESG objectives are considered increasingly important in the context of an economy that is influenced increasingly by CSR-related issues (Capelli et al. 2021). Kumar & Firoz, (2022) revealed that ensuring a better ESG helps companies to improve their Corporate Financial Performance (CFP), create credibility and a good image, and promote the ethical practices of the company (Kumar & Firoz, 2022). High ESG disclosure companies deserve attention for investors due to their lower risk of financial irregularities. To encourage market development through standard regulation, adequate regulatory policies are needed that can disclose ESG (Yuan et al., 2022). With enabling ESG disclosure, companies develop more efficient businesses. This is because ESG disclosure aims to support stakeholder needs as well as sustainable company development. In addition, if the company has transparent and quality internal management, the company will reduce the risk of fraud and training costs for new employees and improve product quality and productivity per employee (Suttipun &Yordudom, 2021).
There are three significant contributions from this paper. First, this paper presents review literature that discusses Environmental, Social, and Governance (ESG), which is helpful for subsequent researchers. Secondly, this paper is also useful for stakeholders, especially those related to companies that implement Environmental, Social, and Governance (ESG), which is usually related to investment. Finally, the results of this literature review can increase perspectives related to environmental, social and governance not only for investors but also for regulators or the government.
This research is expected to answer four research questions. They are: (1) What variables are commonly used in environmental, social and governance studies? 2) What types of variables (independent, dependent, mediating or moderation are used in environmental, social and governance studies? (3) What theories are used in environmental, social and governance studies that provide conclusive or inconclusive results? (4) What are the trending results leading to future research?. This paper describes a literature review of 25 papers about Environmental, Social and Governance (ESG) referring to journals at the Q1 levels. This paper describes the research methods, theories, data, variables, and research results revealed at the following stage. Furthermore, the paper explains related to the theory that is predominantly used by researchers and outlines topics related to environmental, social, and governance. Finally, this study reveals the conclusions of the paper and also suggestions for future research.  From Table 2, it can be seen that these articles were published in Q1 from the Scimagojr. There are four (16%) articles on Business strategy and the environment. Meditari Accountancy Research, Journal of Business Ethics, and Journal of Cleaner Production consist of three (3) papers (12%). Two (2) papers (8%) from journals include Corporate Social Responsibility and Environmental Management, Environment, Development and Sustainability, and Finance Research Letter. Finally, the other is only one (1) paper (4%). It can be seen from Table 2

Conclusion and Suggestions
This paper presents a literature review on Environmental, Social, and Governance (ESG). Previous studies showed a variety of results related to ESG disclosure, ESG valuation, ESG initiatives, ESG issues, ESG footprint, ESG activity, ESG index, ESG principles, ESG scores, ESG performance, ESG reporting and ESG ratings.
The two dominant topics about Environmental Social and Governance include ESG disclosure and ESG performance. They also used stakeholder theory. They also used secondary data from Stock Exchange. However, the researchers also used qualitative methods in their study.
There are three suggestions for future research. The first suggestion is that future research should focus their research on ESG disclosure or ESG Performance. The next suggestion is that future research can use qualitative methods as by conducting a case study, or direct interviews with sources. Finally, future research should be focusing on consumers, investors, stakeholders and policymakers.