Influence of Environmental Social and Governance criteria on Accounting Standards

Abstract

As the global business environment increasingly emphasizes sustainability and ethical governance, there is a pressing need to understand how Environmental, Social, and Governance (ESG) criteria influence accounting standards, particularly in aligning financial reporting with stakeholder expectations. This study explores the impact of ESG factors on the evolution of accounting standards, addressing the gap between the rising importance of ESG metrics and their integration into traditional financial frameworks. Employing a survey design, data were collected through structured questionnaires distributed to investors, regulators, and consumers across various industries using simple random sampling. The analysis, conducted
through Structural Equation Modelling (SEM) using AMOS software version 23.0, reveals that governance and environmental considerations significantly drive the incorporation of ESG into accounting standards, while the social dimension shows a relatively weaker direct influence. These findings highlight the increasing relevance of ESG in reshaping financial reporting practices and underline the need for greater emphasis on the social aspect of ESG integration.