The role of IFRS S1 and S2 in addressing ESG–earnings quality research fragmentation

This study aims to examine the relationship between Environmental, Social, and Governance (ESG) and earnings quality (EQ), with particular emphasis on the role of sustainability-related financial disclosure standards, specifically IFRS S1 and IFRS S2. The review was conducted using a PRISMA-based protocol and analyzed 67 peer-reviewed empirical studies published in ABDC A and A* journals, indexed in Scopus and Web of Science. Given the recent introduction of IFRS S1 and IFRS S2 and the resulting lack of ex post empirical evidence, the study adopts a forward-looking perspective to explore how the disclosure requirements and financial materiality logic embedded in these standards may shape future ESG–EQ research. The results show substantial conceptual and methodological fragmentation in the ESG–EQ literature, particularly in the definition of ESG constructs, the measurement of earnings quality, and the treatment of regulatory contexts. The study’s results have implications for academia, highlighting the potential of IFRS S1 and S2 to enhance comparability by aligning sustainability-related disclosures with decision-useful financial information. This study outlines six avenues for future research, including reconceptualising earnings quality in climate-sensitive contexts, sustainability-related earnings management, cross-report consistency, materiality logic, regulatory adoption, and the roles of assurance and governance.