<b>Literature Review: How Green Bonds and Sustainable Loans Improve Corporate ESG Dimensions</b>

This systematic literature review examines how green bonds and sustainable loans shape corporate ESG performance, synthesising findings from 89 peer-reviewed articles published from 2010-2024. The evidence suggests that the two instruments exert distinct effects. Sustainable loans foster widespread ESG improvements as a result of ongoing monitoring and performance-linked covenants. In contrast, green bonds predominantly increase environmental scores yet leave social and governance dimensions vulnerable to scepticism, alongside persisting concerns regarding greenwashing. Effectiveness is uneven across firm types; larger entities and carbon-intensive sectors post sharper gains, reflecting access to capital and heightened regulatory scrutiny, thus raising fairness questions within inclusive sustainability objectives. Regional patterns illustrate that institutional settings are decisive; European corporations, for example, pivot toward green innovation tracks. A methodological review revealed that experimental evidence tends to indicate smaller effect sizes than correlational studies do, implying that the observed averages might overstate the true causal influence. For corporate finance teams, sustainable loans present stronger prospects for holistic ESG progress, and green bonds remain suitable for narrowly focused environmental initiatives. Policymakers must craft tailored instruments and enhance regulatory oversight to mitigate greenwashing risk.