ESG Regulation and Sustainability Accounting in Macroeconomic Policy: A Literature Review of Effectiveness and Challenges

Muhammad Fauzi; Zakkiatuz Zahrolazizah

doi:10.47134/jmsd.v2i3.662

Authors

Muhammad Fu’ad Al Fauzi Universitas Islam Indonesia
Zakkiatuz Zahrolazizah Universitas Negeri Yogyakarta

DOI:

https://doi.org/10.47134/jmsd.v2i3.662

Keywords:

ESG, Sustainability Accounting, Macroeconomic Policy, Green Economy, Global Regulation

Abstract

This study aims to examine the effectiveness and challenges of implementing Environmental, Social, and Governance (ESG) regulations and sustainability accounting in the context of macroeconomic policy. Using the literature review method, this study collects and analyzes various scientific publications, policy reports, and global data related to ESG implementation in various countries. The results of the study indicate that ESG integration in fiscal, monetary, and investment policies can improve economic stability, strengthen global competitiveness, and encourage sustainable economic growth. However, ESG implementation also faces various obstacles, such as a lack of integration of reporting standards, greenwashing practices, limited institutional capacity, and conflicts between short-term economic goals and long-term sustainability. Therefore, efforts are needed to harmonize regulations, improve ESG literacy, and international collaboration in financing and technology transfer to optimize the role of ESG in global economic development. This study provides theoretical and practical contributions to the formulation of more inclusive and sustainable economic policies.

References

Alsayegh, M. F., Abdul Rahman, R., & Homayoun, S. (2020). Corporate economic, environmental, and social sustainability performance transformation through ESG disclosure. Sustainability, 12(9), 3910. DOI: https://doi.org/10.3390/su12093910

Amel-Zadeh, A., & Serafeim, G. (2018). Why and how investors use ESG information: Evidence from a global survey. Financial analysts journal, 74(3), 87–103. DOI: https://doi.org/10.2469/faj.v74.n3.2

Arvidsson, S., & Dumay, J. (2022). Corporate ESG reporting quantity, quality and performance: Where to now for environmental policy and practice? Business strategy and the environment, 31(3), 1091–1110. DOI: https://doi.org/10.1002/bse.2937

Boneva, L., Ferrucci, G., & Mongelli, F. P. (2022). Climate change and central banks: what role for monetary policy? Climate Policy, 22(6), 770–787. DOI: https://doi.org/10.1080/14693062.2022.2070119

Chen, S., Song, Y., & Gao, P. (2023). Environmental, social, and governance (ESG) performance and financial outcomes: Analyzing the impact of ESG on financial performance. Journal of environmental management, 345, 118829. DOI: https://doi.org/10.1016/j.jenvman.2023.118829

Chopra, S. S., Senadheera, S. S., Dissanayake, P. D., Withana, P. A., Chib, R., Rhee, J. H., & Ok, Y. S. (2024). Navigating the challenges of environmental, social, and governance (ESG) reporting: The path to broader sustainable development. Sustainability, 16(2), 606. DOI: https://doi.org/10.3390/su16020606

Dasinapa, M. B. (2024). The integration of sustainability and ESG accounting into corporate reporting practices. Advances in Applied Accounting Research, 2(1), 13–25. DOI: https://doi.org/10.60079/aaar.v2i1.167

Doni, F., & Johannsdottir, L. (2020). Environmental social and governance (ESG) ratings. Climate action, 435–449. DOI: https://doi.org/10.1007/978-3-319-95885-9_36

Hassani, B. K., & Bahini, Y. (2022). Relationships between ESG disclosure and economic growth: A critical review. Journal of Risk and Financial Management, 15(11), 538. DOI: https://doi.org/10.3390/jrfm15110538

Lee, C. L., & Liang, J. (2024). The effect of carbon regulation initiatives on corporate ESG performance in real estate sector: International evidence. Journal of Cleaner Production, 453, 142188. DOI: https://doi.org/10.1016/j.jclepro.2024.142188

Lindsay, R., & Martella, R. (2020). Corporate Social Responsibility–Sustainable Business: Environmental, Social and Governance Frameworks for the 21st Century. Kluwer Law International BV.

Lupu, I., Hurduzeu, G., & Lupu, R. (2022). How is the ESG reflected in European financial stability? Sustainability, 14(16), 10287. DOI: https://doi.org/10.3390/su141610287

Matos, P. (2020). ESG and responsible institutional investing around the world: A critical review. DOI: https://doi.org/10.2139/ssrn.3668998

Mohd Daud, S. N., Ghazali, N. S., & Mohammad Ismail, N. H. (2024). ESG, innovation, and economic growth: an empirical evidence. Studies in Economics and Finance, 41(4), 845–870. DOI: https://doi.org/10.1108/SEF-11-2023-0692

Mooneeapen, O., Abhayawansa, S., & Mamode Khan, N. (2022). The influence of the country governance environment on corporate environmental, social and governance (ESG) performance. Sustainability Accounting, Management and Policy Journal, 13(4), 953–985. DOI: https://doi.org/10.1108/SAMPJ-07-2021-0298

Ng, T.-H., Lye, C.-T., Chan, K.-H., Lim, Y.-Z., & Lim, Y.-S. (2020). Sustainability in Asia: The roles of financial development in environmental, social and governance (ESG) performance. Social Indicators Research, 150, 17–44. DOI: https://doi.org/10.1007/s11205-020-02288-w

Oprean-Stan, C., Oncioiu, I., Iuga, I. C., & Stan, S. (2020). Impact of sustainability reporting and inadequate management of ESG factors on corporate performance and sustainable growth. Sustainability, 12(20), 8536. DOI: https://doi.org/10.3390/su12208536

Panagopoulos, A., & Tzionas, I. (2023). The Use Of Sustainable Financial Instruments In Relation To The Social Impact Investment: Esg Policies, Capital Markets’ Approach And Investors’ Protection: An Innovative Perspective For A Global Surveillance Authority. International Journal of Business Administration. DOI: https://doi.org/10.5430/ijba.v14n1p87

Park, S. R., & Jang, J. Y. (2021). The impact of ESG management on investment decision: Institutional investors’ perceptions of country-specific ESG criteria. International Journal of Financial Studies, 9(3), 48. DOI: https://doi.org/10.3390/ijfs9030048

Salzmann, E. (2023). Impact of macroeconomic factors on esg (environmental, social, and corporate governance)–index performance: empirical study on eurozone data. Konference doktorand, 120. DOI: https://doi.org/10.37355/KD-2023-09

Shirai, S. (2023). Green central banking and regulation to foster sustainable finance. ADBI Working Paper. DOI: https://doi.org/10.56506/JEMS1821

Singhania, M., & Saini, N. (2023). Institutional framework of ESG disclosures: comparative analysis of developed and developing countries. Journal of Sustainable Finance & Investment, 13(1), 516–559. DOI: https://doi.org/10.1080/20430795.2021.1964810

Taliento, M., Favino, C., & Netti, A. (2019). Impact of environmental, social, and governance information on economic performance: Evidence of a corporate ‘sustainability advantage’from Europe. Sustainability, 11(6), 1738. DOI: https://doi.org/10.3390/su11061738

Thapa, B. S., Adhikari, B., & Pathak, D. D. (2025). Does ESG Performance Drive Long-Term Sustainable Economic Growth in Asia? Insights from a Novel ESG Index and Panel Cointegration Analysis. Nepal Journal of Multidisciplinary Research, 8(1), 1–17. DOI: https://doi.org/10.3126/njmr.v8i1.76036

Weber, B., Staub-Bisang, M., & Alfen, H. W. (2016). Infrastructure as an asset class: investment strategy, sustainability, project finance and PPP. John wiley & sons. DOI: https://doi.org/10.1002/9781119226574