How ESG Reporting is Transforming Corporate Financial Reporting: A Conceptual Framework

Environmental, social, and governance (ESG) reporting has become an essential part of corporate financial reporting and governance. This study develops a conceptual framework to explore how ESG factors influence the quality of corporate financial reports by examining ESG disclosure quality, ESG risk management integration, and engagement in corporate governance. The framework emphasizes stakeholder trust as a key mediator, with firm size and industry serving as moderators that impact these relationships. Based on recent literature and governance theories, the study clarifies how ESG promotes transparency, completeness, and investor confidence in financial disclosures. Practical implications underscore the need for proactive governance structures and robust ESG integration to enhance the quality of reporting and foster stakeholder trust. The framework also highlights challenges such as regulatory differences, data comparability issues, and evolving ESG standards, offering guidance for practitioners and policymakers seeking to support transparent and resilient reporting in a dynamic sustainability environment. Future research should focus on empirical validation through diverse multi-method studies across various institutional settings. This work bridges the gap between ESG and financial reporting research, advancing more accountable and sustainable corporate disclosure practices.