A literature review concerning the non-carbon-related environmental goals of the EU Taxonomy Regulation and the European Sustainability Reporting Standards (ESRS)

Purpose - This study analyzes the firm- and country-related determinants and consequences on the firm value of the non-carbon-related environmental goals of the EU Taxonomy Regulation and the new European Sustainability Reporting Standards (ESRS). In contrast to prior research on either total environmental or explicit carbon proxies, this work focuses on emissions, biodiversity, resource use/circular economy, and water-related measures.
Design/methodology/approach - Based on legitimacy theory, a structured literature review drawing from 80 peer-reviewed empirical-quantitative studies was presented. As the primary contributors to environmental subitems, the results related to corporate and country governance, and financial and sustainability determinants were highlighted. In alignment with the business case argument, the influence of environmental outputs on accounting- and market-based financial performance and other relevant firm proxies was focused.
Findings - Most included variables show rather inclusive significant results. However, the results clearly suggest that board gender diversity has a positive impact on environmental outputs, particularly in relation to emissions reductions and resource use efficiency/circular economy performance.
Research limitations/applications - Our study mainly contributes to the growing literature on corporate environmental reporting and performance. Future research should analyze related subpillars in more detail and the impact of sustainable corporate governance on these dimensions.
Originality/value – To the best of our knowledge, this is the first empirical study on environmental performance and reporting based on the environmental topics of the EU Taxonomy Regulation.