The Role of ESG Reporting in Improving Financial Statement Transparency, Risk Mitigation, and Corporate Sustainability: A Systematic Literature Review

Abstract

This study aims to analyze the role of Environmental, Social, and Governance (ESG) reporting in improving the transparency of financial statements and mitigating corporate risks. Using a qualitative systematic literature review approach based on 22 journal articles published in Google Scholar from 2021–2026, this study examines the relationship between ESG disclosures, financial reporting quality, investor perception, and risk mitigation. The results show that ESG reporting enhances the transparency of financial statements, reduces information asymmetry, strengthens investor confidence, and increases corporate resilience to economic and market risks. Companies with strong ESG disclosures also tend to demonstrate higher financial reporting quality, more stable firm value, and more effective risk management. In addition, ESG reporting strengthens corporate governance practices, improves the ability to identify and manage risks proactively, and supports corporate sustainability through more structured and sustainable risk mitigation. This study contributes to the development of sustainability accounting and provides practical implications for companies, investors, and regulators in integrating ESG reporting into modern and sustainable financial reporting systems.