THE ROLE OF ESG FACTORS IN INVESTMENT DECISION MAKING AND CORPORATE FINANCIAL PERFORMANCE

Environmental, Social, and Governance (ESG) factors have become central to modern investment strategies and corporate management. This paper reviews the role of ESG in investment decision-making and its impact on corporate financial performance (CFP) based on recent literature and meta-analyses. The findings generally indicate a positive relationship between strong ESG practices and corporate metrics such as ROA, ROE, firm value, and risk reduction, while portfolio-level investment returns tend to be neutral to slightly positive. Practical implications for investors and companies are discussed.

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