Accounting for Society: Examining the Interplay between Financial Reporting and Social Responsibility

Abstract

Purpose: This research explores the intersection of financial reporting and social responsibility by integrating Environmental, Social, and Governance (ESG) metrics into corporate financial reports. It aims to assess how sustainability reporting frameworks impact transparency and stakeholder engagement in the corporate sector. Research Design and Methodology: Utilizing a systematic literature review and interpretive analysis, this study examines existing theoretical and empirical literature to understand the evolution of financial reporting frameworks towards incorporating social responsibility. An interpretivist approach through thematic analysis identifies key patterns and insights. Findings and Discussion: The results show a significant paradigm shift in financial reporting, with an increasing inclusion of ESG metrics alongside traditional financial information. This change is driven by regulatory requirements and stakeholder demand, focusing on enhanced transparency and accountability. Challenges like greenwashing and the authenticity of social responsibility claims persist, affecting standardization and data assurance. Implications: The findings emphasize the need for more robust, standardized reporting frameworks to boost the credibility and comparability of sustainability reports. Highlighting corporate accountability, the study suggests that merging financial reporting with social responsibility is vital for future research, especially regarding its impact on corporate reputation and stakeholder relations.