The Role of ESG Factors and Governance in Enhancing Sustainability Reporting Quality and Investment Attractiveness

Abstract

In today’s business landscape, Environmental, Social, and Governance (ESG) factors have become central to evaluating corporate sustainability and long-term financial value. Global investors are increasingly prioritizing companies that integrate ESG principles into their strategic frameworks and reporting systems. However, the effectiveness of ESG implementation relies heavily on governance quality, which ensures that sustainability practices are not merely symbolic but embedded into corporate accountability structures. This study aims to explore the role of ESG factors and corporate governance mechanisms in improving the quality of sustainability reporting and enhancing a company’s investment attractiveness. Employing a qualitative approach with a literature review method, the research draws insights from 10 peer-reviewed academic sources published between 2019 and 2025. These studies were analyzed through content analysis and thematic synthesis to identify key patterns, strategies, and institutional practices linking ESG performance with investor behavior and disclosure quality. The findings reveal that firms with strong ESG integration and transparent governance tend to produce more credible, comprehensive sustainability reports. Such reports contribute to increased investor confidence, enhanced reputational capital, and access to green financing. In the Indonesian context, regulatory frameworks such as the Financial Services Authority’s Regulation No. 51/POJK.03/2017 have helped institutionalize ESG reporting, although variability in report quality persists. This study contributes to stakeholder and signaling theory by demonstrating how ESG practices serve as strategic tools for aligning corporate objectives with market expectations.