Citation:

Swapna Raghupathi, Dr. Shailashri V. T. "ESG Reporting Beyond Disclosure: An Accounting Perspective on Accountability, Capability, and the Company–MSME Divide" International Research Journal of Economics and Management Studies, Vol. 5, No. 9, pp. 21-37, 2026. Crossref. https://doi.org/10.56472/25835238/IRJEMS-V5I9P103

Abstract:

Environmental, social and governance (ESG) reporting has moved from a peripheral communications practice toward a core component of corporate accountability and decision-useful information, reflected in standard-setting activity such as the IFRS Foundation's IFRS S1 and S2, the European Union's Corporate Sustainability Reporting Directive, and India's Business Responsibility and Sustainability Reporting framework. Yet the accounting and corporate reporting literature that explains why ESG reporting matters is disproportionately anchored in large, listed companies, leaving micro, small and medium enterprises (MSMEs) treated either as exempt from the ESG reporting conversation or as scaled-down versions of large-company reporting subjects. This conceptual paper addresses that imbalance from an accounting and corporate reporting perspective. Using a structured conceptual literature synthesis rather than primary empirical methods, the paper integrates stakeholder, legitimacy, institutional, agency and resource-based perspectives with an accountability and decision-usefulness lens to develop a capability-mediated conceptual framework in which reporting capability a firm's accounting infrastructure, technical expertise and governance capacity mediates the relationship between institutional pressure and credible, decision-useful ESG information. The analysis shows that this capability, largely institutionalised in large companies, is the binding constraint for MSMEs, and that MSME reporting expectations therefore require deliberate proportionality rather than a diluted replica of large-company frameworks an argument grounded conceptually and illustrated through the European Union's Voluntary Sustainability Reporting Standard for non-listed SMEs. The paper contributes a theoretically integrated account of why ESG reporting matters from an accounting standpoint, an explicit distinction between ESG disclosure and ESG performance, and a proportionality-based conceptual typology of MSME reporting positions. Implications for regulators, lenders, supply-chain buyers and future empirical research are discussed, alongside the limitations inherent in a conceptual, non-empirical treatment.

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Keywords:

ESG Reporting, Accounting and Accountability, Information Asymmetry, Reporting Capability, Sustainability Accounting, MSMEs, Proportionality.