Over the last decade, sustainable finance has appeared to be capturing a high level of interest as a crucial pillar of sustainable development. The process of taking environmental, social, and governance (ESG) considerations into account when making investment decisions in the financial sector is expected to play a key role in this framework, and although it has attracted the attention of many scholars and academics, a lack of understanding of the nature of the phenomenon remains. Therefore, on the basis of a systematic literature review of 80 studies, we examine, in detail, the subject areas and emphasize the main points in the existing literature. The findings reveal that there are four main thematic areas attracting research interest, as follows: (1) A shift in value creation; (2) green bonds; (3) ESG ratings and performance; and (4) sustainable finance, banking, and financial risks. Finally, this study outlines future research avenues in the field.

This paper examines the relationship between ESG ratings, as a subset of criteria and a tool for assessing sustainability, and firm performance in Southern European economies. It focuses on publicly listed large-cap companies in Portugal, Italy, Greece, and Spain. By analyzing a sample of 110 firms over a four-year period and applying Ohlson’s valuation model, we evaluate how ESG scores influence these companies’ performance. Our findings indicate that the social dimension is positive and statistically significant, suggesting that investors in Southern Europe increasingly prioritize value social responsibility initiatives as they aim to identify and manage ESG risks. In contrast, the Environmental and Governance components do not show statistical significance. The “polluting dummy” variable is positive and significant at the 1% level, indicating a valuation premium for high-emission firms, possibly reflecting investors’ preference for financial stability in economically volatile environments. The baseline model yields an R² of approximately 10%, consistent with expectations given the multifactor nature of stock prices. The study contributes to the sustainability literature by highlighting the nuanced and region-specific role that ESG factors play in market valuation. We discuss limitations related to the regional scope, rating methodologies, and model specification, and offer suggestions for future research.

The chapter is a conceptual study that provides insights into the concept of creating value through the implementation of ESG practices as a way for organizations to respond to world challenges and climate change. It analyzes the concepts of ESG and value creation to enchase their understanding and focuses on the role of human resources as a strategic link that plays a crucial role in the implementation of social strategies and its effect on the holistic employee experience.