Impact of Environmental Disclosure Practices on Financial Performance: A Systematic Exploration of Literature

In a constant quest for profitability, the companies across the globe are making desired and undesired (residual) contributions to the planet's ecosystem.An important way of instilling sustainability in the businesses is by inclusion of environmental disclosure practises in the financial statements of the corporate enterprises.The integration of reporting environmental disclosures with corporate strategy can yield win-win results for the company as well as the stakeholders by reflecting their commitment towards sustainable development and at the same time delivering better value to their shareholders.This paper attempts a systematic review of literature on impact of environmental disclosure practices on financial performance.The studies reviewed in this paper were selected on the basis of Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines with clearly defined eligibility criteria.The study finds that Bloomberg ESG disclosure score has been the leading parameter to measure environmental disclosure practices and financial performance has been primarily measure on accounting-based ratios and on the basis of market value.It also lists the key parameters used to measure 'environmental disclosures'(ED) and 'firm's performance' (FP) used in developed and developing countries.The review suggests that 'environmental disclosures' had a significant and positive impact on majority 'firm's performance' in both developed and developing countries.However, variations in terms of results have also been found in sizeable number of studies.The study will be beneficial to regulatory bodies, researchers and accounting professionals to develop the current understanding of work done and build upon the gaps.