Exploring how ESG influences firm financial performance through financial mechanisms boundary conditions and ESG aligned Sukuk

The transition towards sustainable finance has fundamentally reshaped corporate value creation, yet the precise mechanisms linking environmental, social, and governance (ESG) initiatives to firm financial performance remain theoretically fragmented and empirically contested. To systematically disentangle this, this study applies a hybrid literature review methodology that combines macroscopic bibliometric mapping with in-depth microscopic qualitative content analysis. Based on a meticulously curated dataset of 624 peer-reviewed articles from the Web of Science Core Collection (2014–2026). Using a concentrated sub-sample of 45 core studies for rigorous thematic extraction, this research reconstructs the field’s intellectual topography. This study demystifies the transmission by revealing a complex chain-mediated paradigm in which capital pricing and access to financing serve as the central economic conduits, whilst uniquely identifying ESG-aligned Sukuk as a structurally distinct, dual-signalling mechanism for green value creation. This study proposes a conceptual framework arguing that the ultimate financial payoffs of ESG are not universally supported but are strictly governed by exogenous institutional boundary conditions, including investor preferences, institutional support, and government guarantees, thereby providing actionable insights for corporate capital optimisation and macroeconomic green policy design.