Sustainable business practices and firm performance: a systematic literature review

This study systematically reviews the relationship between sustainable business practices (SBP) and firm performance, with particular attention to financial and market outcomes. Anchored in the PRISMA 2020 protocol, we analysed 164 peer-reviewed articles published between 2023 and 2025 across business, management, accounting, and finance. Findings reveal that SBP generally enhance firm performance, though their effects are contingent on strategic alignment, industry context, ownership structure, and institutional environments. Social initiatives, particularly employee-oriented CSR, emerge as the most consistent drivers of productivity, resilience, and long-term firm value, while environmental practices provide cost savings and risk reduction but may face transitional profitability challenges. Economic and governance dimensions primarily strengthen efficiency, oversight, and risk control. Transparent sustainability reporting minimises information asymmetry and enhances credibility. The greatest financial advantages arise from voluntary, material, and assured disclosures, while mandatory, low-quality reports may lead to value erosion. Green innovation and corporate social responsibility (CSR) serve as crucial mediators, with CSR functioning as an ‘insurance-like’ safeguard during crises, while green innovation transforms sustainability efforts into advantages in products and processes. Importantly, their combined effect generates synergistic value creation by linking legitimacy and stakeholder support to technological and financial gains. The review highlights both complementarities and trade-offs across sustainability dimensions and underscores the importance of context-specific strategies.