ESG Practices and Sustainable Performance in Food Manufacturing Firms: A Systematic Review of Theoretical Boundary Conditions
This PRISMA 2020-guided systematic review of 49 studies (2015–2026) on food manufacturing firms reveals that the validity of ESG-performance theories depends critically on listing status and institutional context rather than firm size, highlighting a gap between disclosure and actual practice while proposing a new conceptual framework and research agenda prioritizing unlisted firms and multi-theory designs.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
Imagine a world where the food on our plates is produced in a way that heals the planet rather than harming it. This is the promise of "sustainability" in the food industry, a concept that has grown from a niche concern into a global mandate. To measure whether companies are truly living up to this promise, investors and regulators now rely on a framework called ESG, which stands for Environmental, Social, and Governance. Think of it as a report card with three distinct subjects: how a company treats the earth, how it treats its people, and how it runs its own internal rules. For years, the assumption has been that doing well in these areas automatically leads to doing well in business. However, the food industry is unique; it deals with perishable goods, complex supply chains, and strict safety rules that make it different from a tech company or a bank. This difference raises a critical question: does the standard rulebook for sustainability actually work for the people who grow and process our food?
A recent systematic review by Arbind Pathak of Hainan University tackles this question by looking at nearly fifty studies published between 2015 and 2026. The researcher did not simply add up the results to find an average; instead, they acted like a cartographer, mapping out why different studies seemed to disagree with one another. The review examined research on food manufacturing and beverage firms, looking closely at how scientists measured ESG practices and how they defined "sustainable performance," which can mean anything from making a profit to reducing carbon emissions. The goal was to find a pattern in the chaos and determine if the relationship between doing good and doing well is consistent across the industry.
The investigation revealed that the confusion in the field was not due to random errors, but to a fundamental mismatch between how the data was collected and what was being asked. The review identified five different ways researchers have tried to measure ESG in the food sector. Some used a single, blended score that mixed environmental, social, and governance factors into one number. Others looked at these factors separately, or focused only on how much a company reported in its public documents. A few studies went deeper, looking at specific, tangible actions like food safety certifications or water usage in factories. The findings showed that the type of measurement used dictated the result. When researchers looked at companies that were publicly listed on stock markets, the data often showed a positive link between ESG efforts and business success. But when they looked at smaller, private companies or family-owned businesses, that link often disappeared or even turned negative.
The study found that the key to understanding this split was not the size of the company or the country it was in, but whether the company was listed on a stock exchange and the rules it had to follow. For publicly traded food companies, especially in Europe and parts of Asia, investors and regulators are watching closely. In these environments, strong governance and transparency act as valuable resources that help the company succeed. However, for private companies and small businesses, the same investments often do not pay off in the same way. These smaller firms often lack the pressure from investors to disclose their actions or the market recognition that makes their efforts valuable. In some cases, the review found that these smaller companies were spending money on reporting requirements without actually changing their operations, a gap between what they said they were doing and what they were actually doing. This "decoupling" meant that the effort became a cost rather than a benefit, hurting their financial performance.
The research also highlighted that the three pillars of ESG do not behave the same way. The social pillar, which covers labor conditions and food safety, often builds trust with customers and communities. The environmental pillar, which deals with emissions and waste, can be expensive in the short term but may lead to long-term advantages. The governance pillar, which involves how the company is run, was found to be the most consistently rewarded for listed firms. The review suggests that treating these three areas as a single, blended score hides these important differences. When researchers mixed them together, the positive effects of one pillar could cancel out the negative short-term costs of another, leading to a confusing result that suggested "no effect" when, in reality, specific parts of the strategy were working very well.
Ultimately, the paper concludes that there is no single, universal rule for how sustainability helps food companies. The benefits depend entirely on the context. For large, public companies under strict regulatory pressure, ESG practices can drive better performance. For smaller, private firms, the same practices may not yield the same rewards unless they are integrated into the actual operations of the business rather than just used for reporting. The review proposes a new way forward for researchers and managers: stop treating ESG as a one-size-fits-all concept. Instead, they should look at the specific conditions of the company, such as its ownership structure and the rules it faces, to understand what will actually work. This approach moves the conversation away from asking if sustainability pays off, to asking for whom, under what conditions, and through which specific actions it pays off.
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