Environmental, Social, and Governance (ESG) practices are increasingly shaping how companies operate, invest, and report performance. A peer-reviewed study by Rezekiro Indah Ruthmia and Dr. Lilik Purwanti from Universitas Brawijaya, published in 2026 in the Indonesian Journal of Entrepreneurship & Startups (IJES), shows that accounting plays a central role in making ESG implementation credible, measurable, and useful for long-term business sustainability.
The article, “Trends, Challenges, ESG Implementation, and the Role of Accounting in Supporting Business Sustainability,” analyzes the global development of ESG practices and explains why accounting systems are essential to prevent ESG from becoming a symbolic commitment. The findings matter because ESG information increasingly influences investor decisions, regulatory oversight, and public trust in companies.
ESG Moves from Voluntary Reporting to Strategic Priority
Over the past decade, ESG has shifted from optional disclosure to a strategic business requirement. Investors now use ESG data to assess corporate risk, regulators demand higher transparency, and consumers expect companies to operate responsibly. According to the Universitas Brawijaya researchers, this shift has pushed companies across sectors especially energy, manufacturing, and natural resources to integrate ESG into their core strategies.
The study highlights that ESG adoption is no longer driven only by ethics or reputation. It has become closely linked to financial performance, access to capital, and long-term resilience. Companies with stronger ESG profiles are often viewed as better prepared to manage environmental risks, social pressures, and governance challenges.
Despite this progress, the authors note that ESG implementation remains uneven. Many organizations publish sustainability reports, but the depth, consistency, and reliability of the information vary significantly.
Key Challenges: Greenwashing and Fragmented Standards
One of the main issues identified in the study is greenwashing. This occurs when companies promote an environmentally or socially responsible image without making substantial operational changes. Greenwashing undermines trust and reduces the value of ESG reporting for investors and the public.
Another challenge is the lack of a single global ESG reporting standard. Companies use different frameworks and indicators, making ESG data difficult to compare across industries and countries. As a result, stakeholders struggle to evaluate which companies are genuinely improving sustainability performance.
Cost and capability constraints also limit ESG implementation, particularly for small and medium-sized enterprises. Collecting reliable ESG data requires trained personnel, robust information systems, and verification processes that many organizations are not fully prepared to manage.
Why Accounting Becomes the Backbone of ESG
The central contribution of the Universitas Brawijaya study lies in its explanation of accounting’s role in ESG. The authors argue that accounting is not only about financial statements. It is also a system for measuring, recording, verifying, and communicating non-financial information, including environmental and social impacts.
Accounting helps translate ESG activities into structured data that decision-makers can trust. Through consistent measurement and reporting, accounting reduces ambiguity and supports accountability. This function is critical for avoiding greenwashing and ensuring that ESG disclosures reflect real performance.
Ruthmia and Purwanti emphasize that accounting enables companies to integrate ESG into internal control systems, performance evaluation, and strategic planning. When ESG data is treated with the same rigor as financial data, it becomes more reliable and more useful.
“Accounting supports ESG by ensuring transparency, consistency, and credibility of sustainability information, which strengthens stakeholder trust,” the authors explain in their analysis, drawing on evidence from international literature.
Research Approach in Simple Terms
The study uses a structured review of academic literature and global reports on ESG and sustainability. The authors examined a wide range of peer-reviewed articles, regulatory documents, and professional guidelines to identify trends, challenges, and best practices in ESG implementation.
Rather than focusing on one company or country, the review approach allowed the researchers to compare findings across different contexts. This method provides a broad picture of how ESG is evolving globally and where accounting fits within that evolution.
What the Findings Mean for Business and Policy
The implications of this study extend beyond academia. For businesses, the findings highlight that strong accounting systems are essential for credible ESG reporting. Companies that invest in accounting-based ESG measurement are better positioned to attract investors, manage risks, and demonstrate long-term value creation.
For policymakers and regulators, the study underscores the need for clearer and more harmonized ESG standards. Consistent guidelines would improve comparability and reduce reporting gaps. The authors also point to the importance of independent assurance to strengthen confidence in ESG disclosures.
In education and professional training, the research suggests a growing need for sustainability-focused accounting skills. Future accountants are expected to handle both financial and non-financial data, making ESG competence a key professional requirement.
Toward More Trustworthy Sustainability Practices
The Universitas Brawijaya study concludes that ESG can only support genuine business sustainability when backed by reliable accounting practices. Without accurate measurement and transparent reporting, ESG risks becoming a marketing exercise rather than a driver of positive change.
By positioning accounting as the backbone of ESG, the research offers a practical message for companies and regulators alike: sustainability must be measured, verified, and reported with the same discipline as financial performance.
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