Systematic Literature Review: The Influence of Environment, Social, and Governance on Tax Avoidance

Research Aims: This study aims to investigate the influence of Environmental, Social, and Governance (ESG) performance on corporate tax avoidance practices. It seeks to synthesize findings from previous empirical studies through a Systematic Literature Review (SLR) and to provide theoretical and practical insights into how ESG factors relate to tax avoidance behavior. Design/methodology/approach: This research employs a Systematic Literature Review (SLR) method guided by the PRISMA framework. It analyzes eleven relevant empirical articles published from 2020 onwards that explore the relationship between ESG performance and tax avoidance. The study adopts a constructivist paradigm to interpret patterns and relationships in the existing literature. Research Findings: The majority of studies reviewed reveal a negative relationship between ESG performance and tax avoidance, indicating that companies with better ESG practices tend to avoid aggressive tax strategies. However, several studies found no significant correlation, suggesting that the relationship may vary depending on industry, governance practices, or external factors. Methodological differences and sample limitations were also noted. Theoretical Contribution/Originality: This study contributes to the body of knowledge by integrating agency theory, stakeholder theory, and legitimacy theory to explain the mixed empirical results regarding ESG and tax avoidance. It highlights ESG’s role in promoting transparency and ethical corporate behavior, suggesting that firms with high ESG scores are more likely to comply with tax obligations and avoid reputational risk.