Title: Sustainability Accounting and Reporting: Integration of Environmental, Social, and Governance (ESG) Metrics in Financial Reports and Its Impact on Investment Decisions
Authors: Balogun Abdulrasheed
Volume: 9
Issue: 2
Pages: 83-97
Publication Date: 2025/02/28
Abstract:
The integration of Environmental, Social, and Governance (ESG) metrics into corporate reporting transformed how organizations communicated value creation to stakeholders. This paper explored the evolution of sustainability reporting, emphasizing the shift from traditional financial metrics to a holistic approach that incorporated ESG factors. It examined the mechanisms of ESG integration in financial reports, the frameworks guiding sustainability disclosures, and the influence of ESG reporting on investment decisions. The study highlighted the growing importance of ESG metrics in enhancing transparency, managing risks, and fostering long-term value creation. Key findings revealed that while ESG reporting gained traction globally, challenges such as inconsistent standards, high implementation costs, and the risk of greenwashing persisted. The paper also discussed the role of regulatory bodies in standardizing ESG disclosures and the increasing demand from investors for reliable sustainability data. Case studies of leading companies like Unilever, Microsoft, and Tesla illustrated the strategic advantages of robust ESG reporting. The study concluded with recommendations for companies to adopt integrated reporting, for regulators to mandate standardized disclosures, and for researchers to explore the long-term financial impacts of ESG integration. Ultimately, this research underscored the critical role of ESG metrics in shaping sustainable business practices and informed investment strategies.