The green frontier: materiality and corporate sustainability

Abstract

The main purpose of this research is to evaluate the relationship between the concepts of materiality and Environmental, Social, and Governance (ESG) concerns that are establishing corporate sustainability. It addresses how ESG factors are becoming increasingly more important in business decision-making globally, employing data from different market scenarios (Nguyen et al., 2022; La Rosa & Bernini, 2022; Tang, 2022; Smith & Giamporcaro, 2022; Daugaard, 2022; Chen, 2022). The study emphasizes how ESG has developed from compliance guidelines to strategic elements that are essential for risk management and value development (Barbosa et al., 2023; Zhang et al., 2021). The extended concept of materiality—which goes beyond conventional financial reporting to encompass broader economic, environmental, and social aspects—is at the heart of this theory (Zhou, 2017; Ortar et al., 2016; Deegan & Rankin, 1997). This extension is consistent with the idea of double materiality, which weighs the effects on society, the environment, and the economy equally (van der Enden, 2022). Additionally, the study addresses the challenges and conflicts found in the current frameworks on reporting sustainability, emphasizing a disproportionate emphasis on financial materiality (GRI, 2021) and the divergence with public interest objectives (ICAS, 2022). This thesis advances a sophisticated understanding of materiality and ESG, adding to the conversation on corporate sustainability. It suggests a reporting system that is more equitable and inclusive, bringing business strategies into line with larger social and environmental concerns. A step toward a more integrated approach to sustainability, the findings provide insightful information for both practical use in corporate sustainability reporting and scholarly research.