Influence of environmental social governance (ESG) disclosure on the financial performance (FP) of real estate investment trusts (REITs): A review

Olumide Samson Ola; Mohd Lizam

doi:10.31893/multirev.2026182

Keywords:

sustainable investment

Abstract

Environmental, social and governance (ESG) reporting has become a central lens for assessing value creation and risk in real estate capital markets. This systematic review synthesises empirical evidence on the linkages between ESG disclosure and the financial performance (FP) of real estate investment trusts (REITs) over 2016–2024. A transparent protocol guided by ROSES and PICOC was applied to studies retrieved from Scopus, Web of Science and Google Scholar, with quality appraisal using MMAT. After screening 8,766 records, 28 studies covering 38 countries were retained for content analysis. The evidence indicates a predominantly positive association between ESG disclosure and FP: approximately two-thirds of reviewed studies (≈68%) report favourable links across accounting- and market-based metrics, while about 16% report negative and 16% mixed effects. The “social” and “governance” pillars are most frequently and substantively disclosed, whereas the “environmental” pillar is least reported and, in several studies, exhibits non-linear or initially adverse financial effects before turning positive at higher ESG intensities. Geographically, evidence is concentrated in developed markets (the United States, the United Kingdom, and Australia), with limited but emerging coverage in Asia and persistent gaps in Africa. Methodologically, linear panel regressions dominate, though a subset employs non-linear specifications (e.g., U-shaped relationships) that help reconcile disparate findings by highlighting threshold effects and short-run cost frictions. Overall, the balance of evidence supports ESG disclosure as a value-enhancing strategy for REITs, particularly via social and governance dimensions, while underscoring the need for deeper, sector-specific analyses of environmental investments, standardised disclosure metrics, and expanded coverage of under-studied regions. These insights inform investors, managers and policymakers seeking to align sustainability reporting with financial outcomes in listed real estate.
References
1. Agarwala, N., Jana, S., & Sahu, T. N. (2024). ESG disclosures and corporate performance: A non-linear and disaggregated approach. Journal of Cleaner Production, 437, 140517. https://doi.org/10.1016/j.jclepro.2022.140517
2. Alareeni, B. A., & Hamdan, A. (2020). ESG impact on performance of US S&P 500-listed firms. Corporate Governance, 20(7), 1409–1428. https://doi.org/10.1108/CG-06-2020-0258
3. Albitar, K., Hussainey, K., Kolade, N., & Gerged, A. M. (2020). ESG disclosure and firm performance before and after IR: The moderating role of governance mechanisms. International Journal of Accounting & Information Management, 28(3), 429–444. https://doi.org/10.1108/IJAIM-09-2019-0108
4. Bilgehan, T. (2021). The nexus between financial failure and stock prices: Panel Pedroni, Panel Kao and Panel ARDL co-integration tests in Turkey REITs. Финансы: теория и практика, 25(6), 145–164. https://doi.org/10.26794/2587-5671-2021-25-6-145-164
5. Brounen, D., & Marcato, G. (2018). Sustainable insights in public real estate performance: ESG scores and effects in REIT markets. Lawrence Berkeley National Laboratory. https://escholarship.org/uc/item/6fh1x6gn
6. Chen, Z., & Xie, G. (2022). ESG disclosure and financial performance: Moderating role of ESG investors. International Review of Financial Analysis, 83, 102291. https://doi.org/10.1016/j.irfa.2022.102291
7. Devine, A., Kok, N., & Wang, C. (2023). Sustainability disclosure and financial performance: The case of private and public real estate. The Journal of Portfolio Management, 49(10), 182–202. https://doi.org/10.3905/jpm.2023.1.429
8. Duque-Grisales, E., & Aguilera-Caracuel, J. (2021). Environmental, social and governance (ESG) scores and financial performance of multilatinas: Moderating effects of geographic international diversification and financial slack. Journal of Business Ethics, 168(2), 315–334. https://doi.org/10.1007/s10551-019-04177-w
9. Erol, I., Unal, U., & Coskun, Y. (2023). ESG investing and the financial performance: A panel data analysis of developed REIT markets. Environmental Science and Pollution Research, 30(36), 85154–85169. https://doi.org/10.1007/s11356-023-27791-1
10. Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417. https://doi.org/10.2307/2325486
11. Feng, Z., & Wu, Z. (2023). ESG disclosure, REIT debt financing and firm value. The Journal of Real Estate Finance and Economics, 67(3), 388–422. https://doi.org/10.1007/s11146-022-09916-2
12. Feng, Z., Lu-Andrews, R., & Wu, Z. (2022). The impacts of climate risk on commercial real estate: Evidence from REITs. SSRN. https://doi.org/10.2139/ssrn.4284338
13. Feng, Z., Lu-Andrews, R., & Wu, Z. (2024). Commercial real estate in the face of climate risk: Insights from REITs. Journal of Real Estate Research, 1–29. https://doi.org/10.1080/08965803.2024.2352917
14. Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press. https://doi.org/10.1017/CBO9781139192675
15. Giannopoulos, G., Fagernes, R. V. K., Elmarzouky, M., & Hossain, K. A. B. M. A. H. (2022). The ESG disclosure and the financial performance of Norwegian listed firms. Journal of Risk and Financial Management, 15(6), 237. https://doi.org/10.3390/jrfm15060237
16. Hong, Q. N., Fàbregues, S., Bartlett, G., Boardman, F., Cargo, M., Dagenais, P., ... & Pluye, P. (2018). The Mixed Methods Appraisal Tool (MMAT) version 2018 for information professionals and researchers. Education for Information, 34(4), 285–291. https://doi.org/10.3233/EFI-180221
17. Ilhan, E., Krueger, P., Sautner, Z., & Starks, L. T. (2023). Climate risk disclosure and institutional investors. The Review of Financial Studies, 36(7), 2617–2650. https://doi.org/10.1093/rfs/hhac049
18. Jha, M. K., & Rangarajan, K. (2020). Analysis of corporate sustainability performance and corporate financial performance causal linkage in the Indian context. Asian Journal of Sustainability and Social Responsibility, 5(1), 10. https://doi.org/10.1186/s41180-020-00039-y
19. Kumar, P., & Firoz, M. (2022). Does accounting-based financial performance value environmental, social and governance (ESG) disclosures? A detailed note on a corporate sustainability perspective. Australasian Accounting, Business and Finance Journal, 16(1), 41–72. https://doi.org/10.14453/aabfj.v16i1.4
20. Matos, P. (2020). ESG and responsible institutional investing around the world: A critical review. CFA Institute Research Foundation. https://doi.org/10.2470/rf.v2020.n1.1
21. Mengist, W., Soromessa, T., & Legese, G. (2020). Method for conducting systematic literature review and meta-analysis for environmental science research. MethodsX, 7, 100777. https://doi.org/10.1016/j.mex.2020.100777
22. Mohammad, W. M., & Wasiuzzaman, S. (2021). Environmental, social and governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia. Cleaner Environmental Systems, 2, 100015. https://doi.org/10.1016/j.cesys.2021.100015
23. Mohanty, B., Aashima, Kaushik, M. B., Gehlot, V., & Sharma, S. (2023). Investigating the relationship between corporate sustainability reporting and firm performance: Evidence from emerging economy. International Journal of Sustainable Development and Planning, 18(12), 4031–4040. https://doi.org/10.18280/ijsdp.181234
24. Morri, G., Anconetani, R., & Benfari, L. (2021). Greenness and financial performance of European REITs. Journal of European Real Estate Research, 14(1), 40–61. https://doi.org/10.1108/JERER-03-2020-0021
25. Morri, G., Yang, F., & Colantoni, F. (2024). Green investments, green returns: Exploring the link between ESG factors and financial performance in real estate. Journal of Property Investment & Finance, 42(5), 435–452. https://doi.org/10.1108/JPIF-10-2023-0096
26. Nollet, J., Filis, G., & Mitrokostas, E. (2016). Corporate social responsibility and financial performance: A non-linear and disaggregated approach. Economic Modelling, 52, 400–407. https://doi.org/10.1016/j.econmod.2015.09.019
27. Omokhomion, I. (2023). Real estate investment trusts (REITs) corporate governance and investment decision-making in the United Kingdom, South Africa and Nigeria (Doctoral dissertation, London South Bank University). London South Bank University. https://doi.org/10.18744/lsbu.941v8
28. Park, S. (2017). Corporate social responsibility, visibility, reputation and financial performance: Empirical analysis on the moderating and mediating variables from Korea. Social Responsibility Journal, 13(4), 856–871. https://doi.org/10.1108/SRJ-01-2017-0012
29. Prabawati, P. I., & Rahmawati, I. P. (2022). The effects of environmental, social, and governance (ESG) scores on firm values in ASEAN member countries. Jurnal Akuntansi dan Auditing Indonesia, 26(2), 119–129. https://doi.org/10.20885/jaai.vol26.iss2.art2
30. Pu, G. (2023). A non-linear assessment of ESG and firm performance relationship: Evidence from China. Economic Research – Ekonomska Istraživanja, 36(1), 1–22. https://doi.org/10.1080/1331677X.2022.2113336
31. Robinson, S., & McIntosh, M. G. (2022). A literature review of environmental, social, and governance (ESG) in commercial real estate. Journal of Real Estate Literature, 30(1–2), 54–67. https://doi.org/10.1080/09277544.2022.2106639
32. Rosley, N. A., Muhammad, K., Ghani, E. K., & Sukmadilaga, C. (2023). Environmental, social, and governance disclosure and firm performance: Evidence from firms listed under the FTSE Bursa Malaysia Top 100 Index. Edelweiss Applied Science and Technology, 7(1), 1–18. https://doi.org/10.33805/2576.8484.2153
33. Shabbir, M. S., Aslam, E., Irshad, A., Bilal, K., Aziz, S., Abbasi, B. A., & Zia, S. (2020). Nexus between corporate social responsibility and financial and non-financial sectors’ performance: A non-linear and disaggregated approach. Environmental Science and Pollution Research, 27, 39164–39179. https://doi.org/10.1007/s11356-020-09960-1
34. Tahmid, T., Hoque, M. N., Said, J., Saona, P., & Azad, M. A. K. (2022). Does ESG initiatives yield greater firm value and performance? New evidence from European firms. Cogent Business & Management, 9(1), 2144098. https://doi.org/10.1080/23311975.2022.2144098
35. Wang, X., & Jin, S. (2023). Environmental, social, and governance performance and corporate sustainable development in China. Journal of Global Business and Trade, 19(1), 91–107. https://doi.org/10.2023/jgbt.19.1.91
36. Wellalage, N. H., Kumar, V., Hunjra, A. I., & Al-Faryan, M. A. S. (2022). Environmental performance and firm financing during COVID-19 outbreaks: Evidence from SMEs. Finance Research Letters, 47, 102568. https://doi.org/10.1016/j.frl.2022.102568
37. Yang, K., & Meho, L. I. (2006). Citation analysis: A comparison of Google Scholar, Scopus, and Web of Science. Proceedings of the American Society for Information Science and Technology, 43(1), 1–15. https://doi.org/10.1002/meet.14504301185
38. Zheng, Z., & Lee, C. L. (2025). A meta-analysis of ESG factors in the real estate investment trusts sector: Exploring their impacts on REITs performance. Engineering, Construction and Architectural Management. Advance online publication. https://doi.org/10.1108/ECAM-05-2024-0652

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

How to cite

Ola, O. S., & Lizam, M. (2025). Influence of environmental social governance (ESG) disclosure on the financial performance (FP) of real estate investment trusts (REITs): A review. Multidisciplinary Reviews, 9(4), 2026182. https://doi.org/10.31893/multirev.2026182

[1] Agarwala, N., Jana, S., & Sahu, T. N. (2024). ESG disclosures and corporate performance: A non-linear and disaggregated approach. Journal of Cleaner Production, 437, 140517. https://doi.org/10.1016/j.jclepro.2022.140517

[2] Alareeni, B. A., & Hamdan, A. (2020). ESG impact on performance of US S&P 500-listed firms. Corporate Governance, 20(7), 1409–1428. https://doi.org/10.1108/CG-06-2020-0258

[3] Albitar, K., Hussainey, K., Kolade, N., & Gerged, A. M. (2020). ESG disclosure and firm performance before and after IR: The moderating role of governance mechanisms. International Journal of Accounting & Information Management, 28(3), 429–444. https://doi.org/10.1108/IJAIM-09-2019-0108

[4] Bilgehan, T. (2021). The nexus between financial failure and stock prices: Panel Pedroni, Panel Kao and Panel ARDL co-integration tests in Turkey REITs. Финансы: теория и практика, 25(6), 145–164. https://doi.org/10.26794/2587-5671-2021-25-6-145-164

[5] Brounen, D., & Marcato, G. (2018). Sustainable insights in public real estate performance: ESG scores and effects in REIT markets. Lawrence Berkeley National Laboratory. https://escholarship.org/uc/item/6fh1x6gn

[6] Chen, Z., & Xie, G. (2022). ESG disclosure and financial performance: Moderating role of ESG investors. International Review of Financial Analysis, 83, 102291. https://doi.org/10.1016/j.irfa.2022.102291

[7] Devine, A., Kok, N., & Wang, C. (2023). Sustainability disclosure and financial performance: The case of private and public real estate. The Journal of Portfolio Management, 49(10), 182–202. https://doi.org/10.3905/jpm.2023.1.429

[8] Duque-Grisales, E., & Aguilera-Caracuel, J. (2021). Environmental, social and governance (ESG) scores and financial performance of multilatinas: Moderating effects of geographic international diversification and financial slack. Journal of Business Ethics, 168(2), 315–334. https://doi.org/10.1007/s10551-019-04177-w

[9] Erol, I., Unal, U., & Coskun, Y. (2023). ESG investing and the financial performance: A panel data analysis of developed REIT markets. Environmental Science and Pollution Research, 30(36), 85154–85169. https://doi.org/10.1007/s11356-023-27791-1

[10] Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417. https://doi.org/10.2307/2325486

[11] Feng, Z., & Wu, Z. (2023). ESG disclosure, REIT debt financing and firm value. The Journal of Real Estate Finance and Economics, 67(3), 388–422. https://doi.org/10.1007/s11146-022-09916-2

[12] Feng, Z., Lu-Andrews, R., & Wu, Z. (2022). The impacts of climate risk on commercial real estate: Evidence from REITs. SSRN. https://doi.org/10.2139/ssrn.4284338

[13] Feng, Z., Lu-Andrews, R., & Wu, Z. (2024). Commercial real estate in the face of climate risk: Insights from REITs. Journal of Real Estate Research, 1–29. https://doi.org/10.1080/08965803.2024.2352917

[14] Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press. https://doi.org/10.1017/CBO9781139192675

[15] Giannopoulos, G., Fagernes, R. V. K., Elmarzouky, M., & Hossain, K. A. B. M. A. H. (2022). The ESG disclosure and the financial performance of Norwegian listed firms. Journal of Risk and Financial Management, 15(6), 237. https://doi.org/10.3390/jrfm15060237

[16] Hong, Q. N., Fàbregues, S., Bartlett, G., Boardman, F., Cargo, M., Dagenais, P., ... & Pluye, P. (2018). The Mixed Methods Appraisal Tool (MMAT) version 2018 for information professionals and researchers. Education for Information, 34(4), 285–291. https://doi.org/10.3233/EFI-180221

[17] Ilhan, E., Krueger, P., Sautner, Z., & Starks, L. T. (2023). Climate risk disclosure and institutional investors. The Review of Financial Studies, 36(7), 2617–2650. https://doi.org/10.1093/rfs/hhac049

[18] Jha, M. K., & Rangarajan, K. (2020). Analysis of corporate sustainability performance and corporate financial performance causal linkage in the Indian context. Asian Journal of Sustainability and Social Responsibility, 5(1), 10. https://doi.org/10.1186/s41180-020-00039-y

[19] Kumar, P., & Firoz, M. (2022). Does accounting-based financial performance value environmental, social and governance (ESG) disclosures? A detailed note on a corporate sustainability perspective. Australasian Accounting, Business and Finance Journal, 16(1), 41–72. https://doi.org/10.14453/aabfj.v16i1.4

[20] Matos, P. (2020). ESG and responsible institutional investing around the world: A critical review. CFA Institute Research Foundation. https://doi.org/10.2470/rf.v2020.n1.1

[21] Mengist, W., Soromessa, T., & Legese, G. (2020). Method for conducting systematic literature review and meta-analysis for environmental science research. MethodsX, 7, 100777. https://doi.org/10.1016/j.mex.2020.100777

[22] Mohammad, W. M., & Wasiuzzaman, S. (2021). Environmental, social and governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia. Cleaner Environmental Systems, 2, 100015. https://doi.org/10.1016/j.cesys.2021.100015

[23] Mohanty, B., Aashima, Kaushik, M. B., Gehlot, V., & Sharma, S. (2023). Investigating the relationship between corporate sustainability reporting and firm performance: Evidence from emerging economy. International Journal of Sustainable Development and Planning, 18(12), 4031–4040. https://doi.org/10.18280/ijsdp.181234

[24] Morri, G., Anconetani, R., & Benfari, L. (2021). Greenness and financial performance of European REITs. Journal of European Real Estate Research, 14(1), 40–61. https://doi.org/10.1108/JERER-03-2020-0021

[25] Morri, G., Yang, F., & Colantoni, F. (2024). Green investments, green returns: Exploring the link between ESG factors and financial performance in real estate. Journal of Property Investment & Finance, 42(5), 435–452. https://doi.org/10.1108/JPIF-10-2023-0096

[26] Nollet, J., Filis, G., & Mitrokostas, E. (2016). Corporate social responsibility and financial performance: A non-linear and disaggregated approach. Economic Modelling, 52, 400–407. https://doi.org/10.1016/j.econmod.2015.09.019

[27] Omokhomion, I. (2023). Real estate investment trusts (REITs) corporate governance and investment decision-making in the United Kingdom, South Africa and Nigeria (Doctoral dissertation, London South Bank University). London South Bank University. https://doi.org/10.18744/lsbu.941v8

[28] Park, S. (2017). Corporate social responsibility, visibility, reputation and financial performance: Empirical analysis on the moderating and mediating variables from Korea. Social Responsibility Journal, 13(4), 856–871. https://doi.org/10.1108/SRJ-01-2017-0012

[29] Prabawati, P. I., & Rahmawati, I. P. (2022). The effects of environmental, social, and governance (ESG) scores on firm values in ASEAN member countries. Jurnal Akuntansi dan Auditing Indonesia, 26(2), 119–129. https://doi.org/10.20885/jaai.vol26.iss2.art2

[30] Pu, G. (2023). A non-linear assessment of ESG and firm performance relationship: Evidence from China. Economic Research – Ekonomska Istraživanja, 36(1), 1–22. https://doi.org/10.1080/1331677X.2022.2113336

[31] Robinson, S., & McIntosh, M. G. (2022). A literature review of environmental, social, and governance (ESG) in commercial real estate. Journal of Real Estate Literature, 30(1–2), 54–67. https://doi.org/10.1080/09277544.2022.2106639

[32] Rosley, N. A., Muhammad, K., Ghani, E. K., & Sukmadilaga, C. (2023). Environmental, social, and governance disclosure and firm performance: Evidence from firms listed under the FTSE Bursa Malaysia Top 100 Index. Edelweiss Applied Science and Technology, 7(1), 1–18. https://doi.org/10.33805/2576.8484.2153

[33] Shabbir, M. S., Aslam, E., Irshad, A., Bilal, K., Aziz, S., Abbasi, B. A., & Zia, S. (2020). Nexus between corporate social responsibility and financial and non-financial sectors’ performance: A non-linear and disaggregated approach. Environmental Science and Pollution Research, 27, 39164–39179. https://doi.org/10.1007/s11356-020-09960-1

[34] Tahmid, T., Hoque, M. N., Said, J., Saona, P., & Azad, M. A. K. (2022). Does ESG initiatives yield greater firm value and performance? New evidence from European firms. Cogent Business & Management, 9(1), 2144098. https://doi.org/10.1080/23311975.2022.2144098

[35] Wang, X., & Jin, S. (2023). Environmental, social, and governance performance and corporate sustainable development in China. Journal of Global Business and Trade, 19(1), 91–107. https://doi.org/10.2023/jgbt.19.1.91

[36] Wellalage, N. H., Kumar, V., Hunjra, A. I., & Al-Faryan, M. A. S. (2022). Environmental performance and firm financing during COVID-19 outbreaks: Evidence from SMEs. Finance Research Letters, 47, 102568. https://doi.org/10.1016/j.frl.2022.102568

[37] Yang, K., & Meho, L. I. (2006). Citation analysis: A comparison of Google Scholar, Scopus, and Web of Science. Proceedings of the American Society for Information Science and Technology, 43(1), 1–15. https://doi.org/10.1002/meet.14504301185

[38] Zheng, Z., & Lee, C. L. (2025). A meta-analysis of ESG factors in the real estate investment trusts sector: Exploring their impacts on REITs performance. Engineering, Construction and Architectural Management. Advance online publication. https://doi.org/10.1108/ECAM-05-2024-0652

Abstract

References

How to cite