A review of recent developments in ESG and corporate finance

The integration of Environmental, Social, and Governance (ESG) considerations into corporate finance has generated extensive yet fragmented research. Existing findings are heterogeneous, and causal claims are often undermined by measurement noise, selection bias, and pronounced ESG rating divergence. This lack of consensus obscures the mechanisms through which ESG affects firm value. To address this gap, this paper reviews recent developments by organizing evidence around five transmission chann