CLIMATE CHANGE RISK FOR SUSTAINABILITY: THE IMPLICATION ON FINANCIAL AND ENVIRONMENT, SOCIAL AND GOVERNANCE REPORTING

Objective: This study explores several aspects of climate change risk on financial reporting and the provision of non-financial information in relation to climate change risk and other important information in social and governance aspects (collectively referred to as environment, social and governance (ESG). This study also extends the analysis of assurance standard use in guaranteeing ESG reporting. Methodology: This study utilizes professional and industry reports and research papers on issues related to the subject matter. The industry reports provide data from 2019 to 2020, and the current state of ESG reporting has been analyzed. Findings: Climate change risk has a significant effect on financial reporting. Auditors should consider climate change risk when performing a financial statement audit. Non-financial information, such as ESG or sustainability reporting, has been included as part of corporate reporting, given that non-financial information has been used when stakeholders make their investment or other decisions. Originality/Value: This study adds new knowledge by exploring the influence of climate change risk on financial reporting. Specifically, ESG frameworks, guidelines or standards are referred by companies when preparing the sustainability reporting to their stakeholders. Implication: This study shows that practicing sustainable reporting helps companies increase trustworthiness to stakeholders. It also highlights that more research should be conducted on issues related to current ESG practices, accounting standards and acceptance of stakeholders towards better sustainability.