International Journal on Science and Technology

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ESG-Driven HR Practices as a Driver for Creation of Sustainable Firm Value: A Systematic Survey of Literature

Author(s) Rajib Bhattacharya, Lopamudra Roy, Smita Chakraborty, Pramit SenGupta
Country India
Abstract The growing prominence of Environmental, Social, and Governance (ESG) considerations has fundamentally reshaped how organizations define performance, risk, and long-term value creation. While prior research has extensively examined the relationship between ESG performance and financial outcomes, comparatively less attention has been paid to the organizational mechanisms through which ESG commitments are operationalized. In particular, the role of human resource (HR) practices as a conduit between ESG strategies and financial value remains fragmented across multiple research streams. This systematic literature review addresses this gap by synthesizing existing evidence on ESG-oriented HR practices and their implications for long-term financial value creation. Adopting a PRISMA-compliant systematic literature review methodology, the study integrates insights from sustainable HRM, green HRM, and ESG–financial performance research. Drawing on a broad range of conceptual, empirical, and meta-analytic studies published in leading peer-reviewed journals, the review examines how HR practices aligned with environmental, social, and governance priorities influence firm-level financial outcomes such as profitability, firm value, stock market performance, and risk. The analysis reveals that ESG-oriented HR practices are rarely associated with immediate financial gains but tend to generate value through indirect and cumulative mechanisms operating over longer time horizons. The review identifies several key pathways linking ESG-HR practices to financial performance, including human capital enhancement, employee engagement and retention, innovation and operational efficiency, reputational gains, and risk reduction. Importantly, the evidence highlights that these effects are highly contingent on issue materiality, industry context, institutional environments, and the degree of integration of HR practices within broader organizational systems. Firms that adopt coherent bundles of ESG-aligned HR practices, rather than isolated or symbolic initiatives, are more likely to experience sustainable financial benefits. At the same time, the review documents significant measurement challenges and empirical heterogeneity arising from inconsistent ESG ratings, limited HR-specific indicators, and methodological issues related to causality and endogeneity. These limitations underscore the need for more granular, longitudinal, and context-sensitive research designs. This review advances understanding of how people management practices underpin ESG performance and sustainable value creation. By positioning HRM as a central operational bridge between ESG commitments and financial outcomes, the study offers a more nuanced perspective on the business case for ESG and identifies promising directions for future research and managerial practice.
Keywords ESG-oriented HR practices, Sustainable human resource management, Green HRM, Firm value, Sustainable value creation
Field Business Administration
Published In Volume 17, Issue 1, January-March 2026
Published On 2026-02-11
DOI https://doi.org/10.71097/IJSAT.v17.i1.10345
Short DOI https://doi.org/hbn7xq
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