Advancing Sustainable Finance And Accounting: Challenges And Opportunities

Abstract

The accelerating global climate crisis and mounting stakeholder pressure have catalyzed a paradigm shift in corporate financial management and accounting practices, necessitating the integration of environmental, social, and governance (ESG) considerations into traditional financial frameworks. This paper examines the growing nation of sustainable finance and accounting, identifying critical challenges and emerging opportunities in the transition toward a more sustainable financial system. Through a mixed-methods approach combining quantitative analysis of 500 global companies' sustainability reports and qualitative interviews with 50 finance executives, we investigate the implementation barriers and success factors in adopting sustainable finance practices. Our findings reveal significant differences in ESG measurement methodologies, highlighting the urgent need for standardized frameworks and enhanced disclosure requirements. The research identifies three key challenges: (1) the complexity of quantifying non-financial impacts, (2) the absence of unified reporting standards, and (3) the misalignment between short-term financial metrics and long-term sustainability goals. However, we also uncover promising opportunities, including innovative green financial products, improved risk management through ESG integration, and enhanced stakeholder trust through transparency. The paper contributes to the growing body of literature on sustainable finance by proposing a novel framework for integrating sustainability metrics into traditional accounting systems while maintaining the rigor of financial reporting. Our recommendations provide practical insights for practitioners, policymakers, and academics working toward the advancement of sustainable finance practices in an increasingly complex global economy.