Integrating ESG Indicators into Corporate Financial Reports: Realistic Dilemmas and Countermeasures—A Paradigm Shift in the Accounting Framework

Abstract

The integration of Environmental, Social, and Governance (ESG) indicators into corporate financial reports is an inevitable trend aligned with the sustainable development theory in corporate accounting. It also serves as a strategic tool for companies to address environmental and social risks and achieve sustainable development. By incorporating ESG indicators, companies can transform non-financial performance into quantifiable references for decision-making, providing stakeholders with a comprehensive value assessment that goes beyond traditional statements. This process offers theoretical support and practical methods for a paradigm shift in accounting. Guided by Information Asymmetry Theory and Signaling Theory, this study analyzes the realistic dilemmas in integrating ESG indicators into corporate financial reports. The findings indicate that the current challenges can be categorized into institutional, market, technical, and corporate levels. Building on these dilemmas, the study clarifies three principles for a renewed accounting framework: systemic relevance, correlation, and dynamism. It further proposes a corresponding accounting framework system comprising four dimensions: an institutional coordination framework, a technical support framework, a market guidance framework, and a corporate management framework. It is hoped that this research will provide theoretical insights for the paradigm shift in corporate accounting. By advancing corporate progress toward sustainable development goals, it aims to offer stakeholders a more comprehensive and accurate basis for evaluating corporate value.