ESG Sustainability and Financial Capital Structure: Where they Stand Nowadays

This study provides a systematic literature review on the linkage between ESG (Environmental, Social, Governance) sustainability and financial capital structure of companies. More specifically, we refer to both ESG sustainability performance and disclosure that literature addresses to be jointly connected to both the cost of equity and the cost of debt. We acknowledge the need to systematically categorize the current literature in order to clearly understand the motifs that guide the association between ESG sustainability and the cost of financing. After conducting a deductive search strategy based on a content analysis, we exploit 31 academics papers, in which both theoretical and empirical results were discussed. We recognize “two-speed theoretical findings”; precisely, we notice that the relation between ESG and the cost of equity is well defined by scholarly studies, whereas there are no clear-cut boundaries between ESG and cost of debt yet, that consequently need to further investigations.