The impact of corporate sustainability practices on firms’ financial performance using the TCCM framework

Abstract The purpose of this study is to investigate the impact of corporate sustainability on a firm’s financial performance through a systematic literature review using the Theory–Context–Construct–Methods (TCCM) framework and Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA). The search process involved Scopus and Web of Science databases, followed by iterative screening of titles, abstracts, and full-text reviews to identify 267 empirical studies published between 2015 and 2024. The findings reveal that quantitative methods have been predominantly used in research on this topic, guided by prevailing theories such as stakeholder theory, legitimacy theory, and agency theory. The results also indicate significant regional research gaps, suggesting the need for comparative studies between developing and developed economies. Furthermore, 60% of the reviewed studies show a positive relationship between corporate sustainability and a firm’s financial performance, while only 5% report a negative relationship. Companies with strong financial performance often priorities sustainability initiatives, which, in turn, enhance their long-term value and stakeholder trust. Additionally, the study offers a conceptual framework to deepen the understanding of the sustainability impact on a firm’s performance, accounting for interactions of different variables. The research also provides practical implications for policymakers to guide strategies and optimize sustainability outcomes.