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This study presents a systematic literature review on the relationship between environmental (ESG) disclosure and green innovation, two key pillars of corporate sustainability strategies. While both have gained prominence in research and practice, their interaction remains contested. Some scholars view ESG disclosure as symbolic, while others argue it can trigger innovation by enhancing transparency, attracting investor attention, or ensuring regulatory compliance. Thus, this review investigates whether disclosure primarily reflects existing green innovation or actively drives it. Based on a comprehensive screening process, we identified 152 peer-reviewed articles published between 2014 and 2024 in A and A* journals (ABDC ranking), from an initial pool of over 11,000 studies. Each selected article was assessed for its research objectives, theoretical framework, and empirical findings. The review synthesizes key insights on the conditions under which environmental disclosure leads to innovation and highlights internal and external factors that shape this dynamic interplay.