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Sustainable investing has experienced rapid growth over the past two decades, resulting in an expanding body of research examining its financial implications. This systematic literature review, conducted using the Preferred Reporting Items for Systematic Reviews (PRISMA) framework, examines the growing body of research on the impact of sustainability on financial performance at both the firm level and the equity based portfolio level. We contribute to the literature by systematically analyzing the sources of heterogeneity underlying divergent empirical findings and by distinguishing between firm-level effects and portfolio-level performance outcomes Through a comprehensive search of studies published over the last two decades, we identified notable differences in reported outcomes by reviewing more than one hundred eligible articles. Our findings indicate that approximately sixty-five percent of the selected studies report positive effects of sustainable investing on firm-level financial performance, compared to thirty-six percent at the portfolio level. We document several key sources of variation across studies, including differences in financial performance proxies, modeling frameworks, sustainability data providers, and geographic contexts. Future researchers are recommended to incorporate the evolving integration of sustainable factors into financial decisions from both theoretical and empirical perspectives.
Boukhaled et al. (Mon,) studied this question.