Environmental, social, and governance (ESG) engagement is often framed as a market-based constraint on aggressive corporate tax behavior, but developing-economy evidence is geographically concentrated, proxy-sensitive, and mostly associational. The review draws on 18 peer-reviewed, firm-level studies published from 2015 to early 2026, each involving firms from at least one World Bank low- or middle-income economy. Governance-related variables, especially board independence, audit oversight, and institutional ownership, were the most frequently reported ESG-related factors associated with lower tax avoidance. However, only a small minority of studies used quasi-experimental, instrumental-variable, or dynamic-panel approaches capable of addressing endogeneity. Environmental-pillar evidence was sparse, and corporate social responsibility expenditure could not be treated as equivalent to standardized social-pillar ESG scores. Composite ESG findings were inconsistent, especially among Chinese A-share studies using similar rating sources. Current evidence supports cautious, targeted governance-focused pilots paired with stronger enforcement infrastructure, not broad reliance on composite ESG scores as tax-compliance tools.
Gyamfi et al. (Fri,) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: