Exploring the relationship between environmental performance and financial performance: a systematic review approach

Purpose This paper systematically examines and synthesizes the literature concerning the impact of environmental performance (EP) on financial performance (FP) within corporate settings, spanning the years 2004–2024. Significantly, the study undertakes a comparative analysis between two distinct periods: 2004–2014 and 2015–2024, aiming to discern the evolution of this relationship over time. Design/methodology/approach Drawing from a meticulous review of 424 papers sourced from the Web of Science database, the study employs the lens of two prominent theoretical frameworks: legitimacy theory and stakeholder theory. Empirical findings are systematically synthesized to elucidate the determinants and consequences of corporate EP on financial outcomes using the PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) approach. Findings Interestingly, the analysis reveals a significant lack of agreement in the theoretical foundations across research examining this empirical occurrence. Leveraging these discoveries, the research proposes interesting directions for further investigation with the goal of expanding our knowledge of the complex interplay between EP and FP in organizational settings. Originality/value This study contributes to the literature by providing a comprehensive two-decade synthesis of the environmental performance–financial performance relationship. Its originality lies in comparing two distinct periods (2004–2014 and 2015–2024), thereby revealing how the field has evolved over time. By integrating evidence from 424 studies, it also highlights the fragmentation and lack of consensus in the theoretical foundations of this research stream. These insights provide a foundation for developing more theoretically coherent future research.