Integrating ESG, Applied Tax Ethics, and Digitalization in Corporate Financial Strategy: A Systematic Review

About this article

Submitted: May 28, 2025
Final Revised: Sep 16, 2025
Accepted: Jan 27, 2026
Published: Dec 30, 2025
Abstract view: 13
PDF Download: 1
Volumes: Vol. 4 No. 2 (2025) Pages 150-163
DOI: 10.63208/21012-219

PDF

License

Cite this article

Abstract

This review examines the intersection of corporate financial strategy, Environmental, Social, and Governance (ESG) criteria, ethical tax planning, and digitalization. Amid digital transformation, the central question is how firms align financial decisions with sustainability and innovation for long-term value. To address this, the study conducts a Systematic Literature Review (SLR), synthesizing 63 Scopus-indexed Q1/Q2 articles (2015–2025). Using thematic analysis, the review identifies four core themes: strategic financial-ESG alignment, the highly contested relationship between ethical tax planning and CSR transparency, the impact of digital decision-support tools, and sectoral and regional differentiation. The synthesis reveals two critical findings: first, the literature is fundamentally divided on whether ESG performance reduces tax avoidance (ethical alignment) or increases it (greenwashing). Second, digitalized tax administration (Big Data) is emerging as a significant external mechanism that inhibits corporate tax avoidance. This synthesis highlights current fragmentation and clarifies the need for holistic frameworks integrating ESG, taxation, and digitalization to advance sustainable financial strategies in the digital era.

Keywords: Corporate Financial Strategy Digital Tools ESG Tax Planning

References

Alexander, A., & Menicacci, L. (2025). Tax governance as a social responsibility of the firm: evidence from the Italian cooperative compliance program. Social Responsibility Journal, 21(8), 1549–1565. https://doi.org/10.1108/SRJ-01-2025-0094.

Almutairi, A. M., & Abdelazim, S. I. (2025). The Impact of CSR on Tax Avoidance: The Moderating Role of Political Connections. Sustainability (Switzerland), 17(1). https://doi.org/10.3390/su17010195.

Alomair, M., & Metwally, A. B. M. (2025). Does ESG Disclosure Matter for the Tax Avoidance–Firm Value Relationship? Evidence from an Emerging Market. Sustainability (Switzerland), 17(9). https://doi.org/10.3390/su17093836.

Amarna, K., López-Pérez, M. V., Garde Sánchez, R., & Rodríguez Ariza, L. (2025). ESG Information Disclosure and Its Relationship to Tax Practices: Stakeholder-Friendly or Legitimacy-Seeking? Sustainable Development, 33(3), 3906–3917. https://doi.org/10.1002/sd.3333.

Asmoro, P. S., Ramakrishnan, S., Arsyanda, S., Alfandia, N. S., Ningsih, D. N. C., Rokhimakhumullah, D. N. F., & Hidayat, K. (2024). ESG disclosure, governance, political connection, and tax Aggressiveness: what information is critical, and is more information always forceful? Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2024.2435600.

Balaskas, S., Nikolopoulos, T., Koutroumani, M., & Rigou, M. (2024). Determinants of Tax Avoidance Intentions in Tourism SMEs: The Mediating Role of Coercive Power, Digital Transformation, and the Moderating Effect of CSR. Sustainability (Switzerland), 16(21). https://doi.org/10.3390/su16219322.

Chandrasena, S., Matthews, L., & Gerged, A. M. (2025). Does the presence of a sustainability committee strengthen the impact of ESG disclosure on tax aggressiveness? Insights from North America. Review of Quantitative Finance and Accounting, 65(3), 1039–1065. https://doi.org/10.1007/s11156-024-01368-z.

Chen, Y., & Lei, S. (2025). Tax avoidance opportunity for multinational enterprises: effects of digitalized tax administration in China. Journal of International Financial Markets, Institutions and Money, 102. https://doi.org/10.1016/j.intfin.2025.102177.

Cumming, D., & Nguyen, M. (2025). The impact of asset specificity on corporate tax avoidance: Do financial constraints and product market power matter? British Accounting Review, 57(3). https://doi.org/10.1016/j.bar.2024.101515.

Dai, T. (2025). Delving into the green growth dilemma and ESG investing in Southeast Asia. Humanities and Social Sciences Communications, 12(1). https://doi.org/10.1057/s41599-024-04184-x.

Ding, R., Cao, Y., & Sun, Y. (2022). The Effects of Mandatory CSR Disclosure on Tax Avoidance and Tax Incidence. Frontiers in Psychology, 13. https://doi.org/10.3389/fpsyg.2022.905153.

Du, M., & Li, Y. (2024). Tax avoidance, CSR performance and financial impacts: evidence from BRICS economies. International Journal of Emerging Markets, 19(10), 3303–3328. https://doi.org/10.1108/IJOEM-05-2022-0747.

Elgharabawy, A., & Aladwey, L. M. A. (2025). ESG performance, board diversity and tax avoidance: empirical evidence from the UK. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-04-2024-0177.

Fu, X., & Zhang, X. (2025). Tax burden and enterprises’ ESG performance. International Review of Financial Analysis, 103. https://doi.org/10.1016/j.irfa.2025.104223.

Gavious, I., Livne, G., & Chen, E. (2022). Does tax avoidance increase or decrease when tax enforcement is stronger? Evidence using CSR heterogeneity perspective. International Review of Financial Analysis, 84. https://doi.org/10.1016/j.irfa.2022.102325.

Ghorbel, I., & Boujelben, S. (2025). Corporate ethics and tax avoidance: the mediating role of good corporate governance. International Journal of Ethics and Systems. https://doi.org/10.1108/IJOES-12-2024-0414.

Gribnau, H. (2015). Corporate Social Responsibility and Tax Planning: Not by Rules Alone. Social and Legal Studies, 24(2), 225–250. https://doi.org/10.1177/0964663915575053.

Guo, X., Wei, T., Wang, A., & Hu, H. (2024). Corporate governance effects of digital finance: Evidence from corporate tax avoidance in China. Research in International Business and Finance, 72. https://doi.org/10.1016/j.ribaf.2024.102526.

Hendayana, Y., Arief Ramdhany, M., Pranowo, A. S., Abdul Halim Rachmat, R., & Herdiana, E. (2024). Exploring impact of profitability, leverage and capital intensity on avoidance of tax, moderated by size of firm in LQ45 companies. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2024.2371062.

Hrazdil, K., Li, J., Li, X., & Zhang, W. (2025). Tax regulations and corporate social responsibility: Evidence from the adoption of addback statutes. Journal of Accounting and Public Policy, 54. https://doi.org/10.1016/j.jaccpubpol.2025.107359.

Ilboudo, T. A. S., Argilés-Bosch, J. M., & Costa, J. A. (2025). Corporate social responsibility and labor tax avoidance: Evidence from Spain. European Management Review, 22(2), 379–396. https://doi.org/10.1111/emre.12646.

Inger, K., & Stekelberg, J. (2022). Valuation implications of socially responsible tax avoidance: Evidence from the electricity industry. Journal of Accounting and Public Policy, 41(4). https://doi.org/10.1016/j.jaccpubpol.2022.106959.

Jäger, M., Mayer, C., Hefter, H., Siebler, M., & Kecskeméthy, A. (2018). Big data and deep learning in preventive and rehabilitation medicine. In Orthopade (Vol. 47, Issue 10, pp. 826–833). Springer Verlag. https://doi.org/10.1007/s00132-018-3603-y.

Jiang, H., Hu, W., & Jiang, P. (2024). Does ESG performance affect corporate tax avoidance? Evidence from China. Finance Research Letters, 61. https://doi.org/10.1016/j.frl.2024.105056.

Jiang, W., Zhang, C., & Si, C. (2022). The real effect of mandatory CSR disclosure: Evidence of corporate tax avoidance. Technological Forecasting and Social Change, 179. https://doi.org/10.1016/j.techfore.2022.121646.

Juddoo, K., Malki, I., Mathew, S., & Sivaprasad, S. (2023). An impact investment strategy. Review of Quantitative Finance and Accounting, 61(1), 177–211. https://doi.org/10.1007/s11156-023-01149-0.

Kiesewetter, D., & Manthey, J. (2017). Tax avoidance, value creation and CSR – a European perspective. Corporate Governance (Bingley), 17(5), 803–821. https://doi.org/10.1108/CG-08-2016-0166.

Kim, J., & Im, C. (2017). Study on corporate social responsibility (CSR): Focus on tax avoidance and financial ratio analysis. Sustainability (Switzerland), 9(10). https://doi.org/10.3390/su9101710.

Lee, H. A. (2024). Exploring the Relationship Between Environmental, Social, and Governance and Tax Avoidance Strategies. SAGE Open, 14(4). https://doi.org/10.1177/21582440241298089.

Lee, J., Kim, S., & Kim, E. (2021). Designation as the most admired firms to the sustainable management of taxes: Evidence from south korea. Sustainability (Switzerland), 13(14). https://doi.org/10.3390/su13147994.

Li, M., & Hu, Y. (2025). ESG performance and cross-region investment: evidence from China. International Journal of Emerging Markets. https://doi.org/10.1108/IJOEM-03-2024-0563.

Li, R., Fei, C., & Fei, W. (2025). Impact of government’s support policy on decision-making of platform participants under ESG. North American Journal of Economics and Finance, 75. https://doi.org/10.1016/j.najef.2024.102303.

Lin, X., Liu, M., So, S., & Yuen, D. (2019). Corporate social responsibility, firm performance and tax risk. Managerial Auditing Journal, 34(9), 1101–1130. https://doi.org/10.1108/MAJ-04-2018-1868.

Ling, T. W., & Abdul Wahab, N. S. (2019). Components of book tax differences, corporate social responsibility and equity value. Cogent Business and Management, 6(1). https://doi.org/10.1080/23311975.2019.1617024.

Luo, J., & Xu, J. (2024). The impact of big data tax administration on corporate ESG—A quasi-natural experiment based on Golden Tax Project III. China Journal of Accounting Research, 17(3). https://doi.org/10.1016/j.cjar.2024.100378.

Mohamad Ariff, A., Kamarudin, K. A., Musa, A. Z., & Mohamad, N. A. (2024). Financial constraints, corporate tax avoidance and environmental, social and governance performance. Corporate Governance (Bingley), 24(7), 1525–1546. https://doi.org/10.1108/CG-08-2023-0343.

Nasih, M., Harymawan, I., Abdul Rasid, S. Z., & Putra, F. K. G. (2024). Tax avoidance and sustainability reporting: Alignment or greenwashing strategy? Corporate Social Responsibility and Environmental Management, 31(6), 6335–6351. https://doi.org/10.1002/csr.2927.

Okuyama, A., Tsugawa, S., Matsunaga, C., & Managi, S. (2025). Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors. Humanities and Social Sciences Communications, 12(1). https://doi.org/10.1057/s41599-024-04199-4.

Overesch, M., & Willkomm, S. (2025). The relation between corporate social responsibility and profit shifting of multinational enterprises. International Tax and Public Finance, 32(2), 466–500. https://doi.org/10.1007/s10797-024-09850-z.

Pande, S., & Mishra, A. (2025). Five decades of ESG reporting research: a synthesis and future research avenues. In Corporate Communications. Emerald Publishing. https://doi.org/10.1108/CCIJ-01-2025-0020.

Paul, J., Lim, W. M., O’Cass, A., Hao, A. W., & Bresciani, S. (2021). Scientific procedures and rationales for systematic literature reviews (SPAR-4-SLR). International Journal of Consumer Studies. https://doi.org/10.1111/ijcs.12695.

Qin, J. (2025). Does digital development inhibit corporate tax avoidance? Evidence from the national big data comprehensive pilot zone policy in China. Finance Research Open, 1(4), 100050. https://doi.org/10.1016/j.finr.2025.100050.

Qutait, Z., & Salem, S. (2025). The role of corporate social responsibility in the tax avoidance of Palestinian companies. Asian Review of Accounting. https://doi.org/10.1108/ARA-03-2024-0088.

Ramesh, V. K., & Athira, A. (2024). Geopolitical risk and corporate tax behavior: international evidence. International Journal of Managerial Finance, 20(2), 406–429. https://doi.org/10.1108/IJMF-10-2022-0428.

Rashid, M. H. U., Begum, F., Hossain, S. Z., & Said, J. (2024). Does CSR affect tax avoidance? Moderating role of political connections in Bangladesh banking sector. Social Responsibility Journal, 20(4), 719–739. https://doi.org/10.1108/SRJ-09-2022-0364.

Saptono, P. B., Mahmud, G., Pratiwi, I., Purwanto, D., Khozen, I., Imantoro, L. W., & Wayan, M. E. (2024). Book-Tax Differences during the Crisis: Does Corporate Social Responsibility Matter? Sustainability (Switzerland), 16(17). https://doi.org/10.3390/su16177271.

Schochet, S., Benlemlih, M., & Jaballah, J. (2022). Is corporate tax avoidance related to employee treatment? Journal of Empirical Finance, 69, 63–80. https://doi.org/10.1016/j.jempfin.2022.08.002.

Sun, X., Han, J., & Işık, C. (2025). Can digital transformation be a “powerful tool” to curb corporate tax avoidance? Mechanism analysis and policy implications based on Chinese data. International Review of Economics and Finance, 102. https://doi.org/10.1016/j.iref.2025.104330.

Vacca, A., Iazzi, A., Vrontis, D., & Fait, M. (2020). The role of gender diversity on tax aggressiveness and corporate social responsibility: Evidence from Italian listed companies. Sustainability (Switzerland), 12(5). https://doi.org/10.3390/su12052007.

Velte, P. (2025). Corporate Social Responsibility (CSR) Decoupling and Tax Avoidance: Symbolic Use of Sustainable Boards in the European Union? Corporate Social Responsibility and Environmental Management, 32(3), 4179–4193. https://doi.org/10.1002/csr.3172.

Wahyudi, L. (2024). Watase Uake: Research Collaboration Tools. Retrieved from https://www.watase.web.id.

Xu, R., & Ren, L. (2025). Natural Disaster, Tax Avoidance, and Corporate Pollution Emissions: Evidence from China. Journal of Business Ethics, 197(1), 195–217. https://doi.org/10.1007/s10551-024-05716-w.

Ylönen, M., & Laine, M. (2015). For logistical reasons only? A case study of tax planning and corporate social responsibility reporting. Critical Perspectives on Accounting, 33, 5–23. https://doi.org/10.1016/j.cpa.2014.12.001.

Yoon, B. H., Lee, J. H., & Cho, J. H. (2021). The effect of esg performance on tax avoidance—evidence from korea. Sustainability (Switzerland), 13(12). https://doi.org/10.3390/su13126729.

Yuan, W., Zhang, M., Guo, X., & Jiang, Y. (2025). ESG disclosure and firm long-term value: The mediating effect of tax avoidance. Finance Research Letters, 83. https://doi.org/10.1016/j.frl.2025.107728.

Zhang, Y., & Yuan, L. (2025). The Effect of ESG Performance on Aggressive Tax Planning in China: The Moderating Role of Internal Control. SAGE Open, 15(2). https://doi.org/10.1177/21582440251341282.

National Sustainable Development Studies

Open Access