Gender Diversity, Sustainable Investment, and Corporate Environmental Performance: A Systematic Review of Investor‐Level and Firm‐Level ESG Mechanisms

ABSTRACT

Environmental, social, and governance (ESG) investing has grown substantially over the past decade, yet the gender dimensions of this transformation remain fragmented across two largely siloed research streams. This systematic literature review applies the Preferred Reporting Items for Systematic Reviews and Meta Analyses (PRISMA) 2020 protocol to synthesize empirical evidence on (a) gender differences in individual investor ESG preferences and (b) the influence of board gender diversity on firm level ESG performance. A search of Scopus, Web of Science, and Google Scholar identified 895 records published between 2015 and first quarter 2026, of which 88 studies met inclusion criteria. Findings reveal that women investors exhibit stronger prosocial investment preferences mediated by ethical sensitivity, social role internalization, and lower tolerance for ESG controversies. At the firm level, board gender diversity correlates positively with ESG disclosure quality and environmental performance, with effects strengthening above the critical mass threshold of three or more women directors. Quasi‐experimental evidence from European board gender quotas suggests causal spillovers from board composition to environmental and social outcomes, although near‐term firm valuation effects remain contested. Convergence between the demand‐side and supply‐side channels is most evident at the disclosure margin and weakest at the financial returns margin. Methodological tensions involve ESG rating divergence, endogeneity of board selection, and underrepresentation of emerging market evidence from the Association of Southeast Asian Nations (ASEAN) region. The review contributes a dual‐channel conceptual framework integrating demand and supply mechanisms, identifies seven priority directions for future research, and offers practical implications for asset managers, board nomination committees, and regulators implementing the European Union Women on Boards Directive 2022/2381.