INTEGRATION OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) IN ACCOUNTING FRAMEWORKS FOR SUSTAINABLE PERFORMANCE: A THEORETICAL REVIEW

Abstract

This paper theoretically reviewed the integration of Environmental, Social, and Governance (ESG) factors into accounting frameworks and its profound implications for sustainable performance. Examining theories such as Institutional Theory, Stakeholder Theory, Resource-Based View Theory, Legitimacy Theory, Triple Bottom Line Theory, and Positive Accounting Theory, this study explores the assumptions and motivations underpinning organizations' adoption of ESG practices in their accounting systems. It underscores how the alignment of accounting with ESG factors can enhance reputation, stakeholder relationships, competitive advantage, and long-term financial viability. By providing a comprehensive theoretical understanding of ESG integration, this review informs organizations, policymakers, and researchers about the dynamics of sustainability performance, advocating for a holistic approach that considers environmental, social, and governance dimensions in accounting frameworks. Such an approach not only fosters ethical and responsible business practices but also aligns with global sustainability objectives, shaping a future where economic success harmonizes with societal well-being and environmental preservation.