Corporate Governance as a Driver of Environmental, Social and Governance Effectiveness in Emerging Markets: A Systematic Review

Abstract

In the evolving landscape of sustainable finance, Environmental, Social, and Governance (ESG) practices have shifted from peripheral initiatives to central determinants of corporate value, particularly within emerging markets. While the significance of ESG is widely recognised, its effective implementation remains inconsistent due to institutional voids and varying governance standards in these dynamic economies. This study aims to systematically review the role of corporate governance as a primary driver of ESG effectiveness in emerging markets. It seeks to identify key governance mechanisms such as board composition, ownership structure, and executive oversight that catalyse sustainability outcomes. Using a systematic literature review (SLR) approach, this paper synthesises 70 peer-reviewed studies published between 2020 and 2025. Bibliometric analysis of keyword trends (Scopus and web of science) was employed to map the thematic evolution of the field, highlighting a significant peak in
research activity during 2023. The Agency and Stakeholder theories were employed in the research. The findings reveal that board independence, gender diversity, and the presence of dedicated sustainability committees are critical internal drivers of ESG performance. However, the effectiveness of these mechanisms is heavily moderated by the institutional environment. The review identifies a "governance ESG nexus" where digital transformation (AI and blockchain) and external regulatory enforcement act as vital facilitators in mitigating greenwashing and reducing information asymmetry. The study concludes that corporate governance is a context-dependent driver of ESG. Effectiveness in emerging markets requires an "integrative perspective" that aligns internal board oversight with external institutional quality and technological capabilities. This review offers a strategic framework for
policymakers and managers to move beyond symbolic compliance toward substantive sustainability integration.