Article Details
Vol. 7 No. 3 (2025): December
Strengthening environmental, social, and governance accountability in international financial institutions
Abstract
Purpose: This study examines how international financial institutions (IFIs) integrate accountability for environmental, social, and governance (ESG) issues into financial governance and decision-making. It assesses whether existing frameworks translate sustainability commitments into binding oversight or primarily function as legitimacy tools in global finance.
Methodology/Approach: A qualitative comparative analysis was conducted using policy frameworks, evaluation reports, audit findings, and peer-reviewed research from 2018–2025. Legitimacy theory and principal–agent dynamics guided interpretation, supported by a coding matrix reviewing rule design, monitoring scope, stakeholder engagement, and data verifiability.
Results/Findings: Findings show that sustainability standards are increasingly embedded in institutional mandates, but implementation remains uneven. Environmental integration is the most advanced, while social safeguards are limited by resourcing and political constraints. Governance accountability remains restricted by institutional mandates. Digital monitoring tools improve oversight but raise concerns about ethical design and unequal technical capacity.
Conclusions: ESG frameworks within IFIs provide strong normative commitments but lack binding enforcement. This creates a persistent gap between institutional ambition and operational practice. Stronger accountability requires harmonized metrics, independent verification, and participatory mechanisms capable of converting transparency into enforceable oversight.
Limitations: Limited access to internal deliberations and the lack of longitudinal community-level data constrain assessments of long-term effectiveness.
Contribution: The study links normative expectations behind ESG accountability with operational control mechanisms in IFIs. It proposes a reform agenda emphasizing mandatory disclosure, independent oversight bodies, and inclusive monitoring systems—framing ESG accountability as a shift from voluntary transparency to enforceable stewardship in global finance.
Keywords
How to Cite
Download Citation
References
- (IEG), I. E. G. (2022). Results and Performance of the World Bank Group 2022. Retrieved from Washington, DC: https://ieg.worldbankgroup.org/evaluations/results-and-performance-world-bank-group-2022
- (OIOS), O. o. I. O. S. (2023). Annual Reports. Retrieved from https://oios.un.org/annual-reports
- (TCFD), T. F. o. C.-R. F. D. (2023). Task Force on Climate-Related Financial Disclosures. Retrieved from https://www.fsb-tcfd.org/
- Abouarab, R., Mishra, T., & Wolfe, S. (2025). Does the EU sustainable finance disclosure regulation mitigate greenwashing? The European Journal of Finance, 31(8), 957-989. doi:https://doi.org/10.1080/1351847X.2025.2457944
- Auditors, E. C. o. (2022). Special Report 09/2022: Climate Spending in the 2014–2020 EU Budget – Not as High as Reported (09/2022). Retrieved from Luxembourg: https://www.eca.europa.eu/en/publications/SR22_09
- Bacher, K., DØskeland, M., Graça, R., Lavrutich, M., Pierce, M., & Pimentel, R. (2025). Greenwashing risk in asset pricing: the shift after the Paris agreement. Quantitative Finance, 1-22. doi:https://doi.org/10.1080/14697688.2025.2563091
- Bao, X., Sadiq, M., Tye, W., & Zhang, J. (2024). The impact of environmental, social, and governance (ESG) rating disparities on corporate risk: The mediating role of financing constraints. Journal of Environmental Management, 371. doi:https://doi.org/10.1016/j.jenvman.2024.123113
- Basali, M. (2025). Impact of Financial Performance and Corporate Governance on ESG Disclosure: Evidence from Saudi Arabia. Sustainability, 17(18), 1-19. doi:https://doi.org/10.3390/su17188473
- Bebbington, J., & Unerman, J. (2020). Advancing research into accounting and the UN sustainable development goals. Accounting, Auditing & Accountability Journal, 33(7), 1657-1670. doi:https://doi.org/10.1108/AAAJ-05-2020-4556
- Brabec, J., & Machá?, J. (2025). Impacts of the EU Taxonomy implementation: a systematic literature review. Climate Policy, 1-13. doi:https://doi.org/10.1080/14693062.2025.2526683
- Busch, D. (2023). EU sustainable finance disclosure regulation. Capital Markets Law Journal, 18(3), 303-328. doi:https://doi.org/10.1093/cmlj/kmad005
- Cantero Saiz, M., Sanfilippo Azofra, S., Torre Olmo, M. B., & Bringas Fernandez, V. (2025). ESG and bank profitability: the moderating role of country sustainability in developing and developed economies. Green Finance, 7(2), 288-331. doi:https://doi.org/10.3934/GF.2025011
- Clark, G. L., Feiner, A., & Viehs, M. (2015). From the stockholder to the stakeholder: How sustainability can drive financial outperformance. Available at SSRN 2508281. doi:https://dx.doi.org/10.2139/ssrn.2508281
- Cochran, I., Mackenzie, C., & Brander, M. (2025). EU’s sustainable finance disclosure regulation: does the hybrid reporting regime undermine the goal to reorient capital to climate action? Climate Policy, 25(1), 76-88. doi:https://doi.org/10.1080/14693062.2024.2353115
- Crippa, M., Guizzardi, D., Pagani, F., Banja, M., Muntean, M., Schaaf, E., . . . Risquez Martin, A. (2023). GHG emissions of all world countries. Publications Office of the European Union, Luxembourg, 10, 1-268. doi:https://doi.org/10.2760/953332
- Dellmuth, L., Tallberg, J., Agne, H., Bexell, M., Gregoratti, C., & Jonsson, K. (2022). Legitimacy in Global Governance. Retrieved from Stockholm: https://www.hhs.se/contentassets/ecbd2ee7244844609602054f7fd9b059/legitimacy-program-1.pdf
- Dingwerth, K., Witt, A., Lehmann, I., Reichel, E., & Weise, T. (2029). International Organizations under Pressure: Legitimating Global Governance in Challenging Times. Oxford: Oxford University Press.
- Ecker-Ehrhardt, M., Dellmuth, L., & Tallberg, J. (2024). Ideology and Legitimacy in Global Governance. International Organization, 78(4), 731-765. doi:https://doi.org/10.1017/S0020818324000304
- Fund, I. M. (2019). A Strategy for IMF Engagement on Social Spending (2019/016). Retrieved from Washington, DC: https://www.imf.org/en/Publications/Policy-Papers/Issues/2019/06/10/A-Strategy-for-IMF-Engagement-on-Social-Spending-46975
- Galletta, S., Mazzù, S., Naciti, V., & Paltrinieri, A. (2024). A PRISMA systematic review of greenwashing in the banking industry: A call for action. Research in International Business and Finance, 69. doi:https://doi.org/10.1016/j.ribaf.2024.102262
- Germain, R. (2016). Susan Strange and the Future of Global Political Economy: Power, Control and Transformation. London: Routledge.
- Group, I. E. (2023). Independent Evaluation Group Validation of the Management Action Record 2023. World Bank Publications-Books.
- Group, W. B. (2023). Geo-Enabling Initiative for Monitoring and Supervision (GEMS). Retrieved from https://www.worldbank.org/en/topic/fragilityconflictviolence/brief/geo-enabling-initiative-for-monitoring-and-supervision-gems
- Hamdouni, A. (2025). Value creation through environmental, social, and governance (ESG) disclosures. Journal of Risk and Financial Management, 18(8), 1-27. doi:https://doi.org/10.3390/jrfm18080415
- Institute, S. R. (2024). New record of 142 natural catastrophes accumulates to USD 108 billion insured losses in 2023, finds Swiss Re Institute. Retrieved from https://www.swissre.com/press-release/New-record-of-142-natural-catastrophes-accumulates-to-USD-108-billion-insured-losses-in-2023-finds-Swiss-Re-Institute/a2512914-6d3a-492e-a190-aac37feca15b
- ISSB. (2022). ISSB Update July 2022. Retrieved from https://www.ifrs.org/news-and-events/updates/issb/2022/issb-update-july-2022/
- Kentikelenis, A., & Stubbs, T. (2024). Social protection and the International Monetary Fund: promise versus performance. Globalization and health, 20(1), 41. doi:https://doi.org/10.1186/s12992-024-01045-9
- Li, Q., Tang, W., & Li, Z. (2024). ESG systems and financial performance in industries with significant environmental impact: a comprehensive analysis. Frontiers in Sustainability, 5, 1454822. doi:https://doi.org/10.3389/frsus.2024.1454822
- Macdonald, K., Bahruddin, Hartoto, A. S., Unger, C., Cisneros, P., Pugley, D. D., . . . Kurniawan, N. I. (2024). The politics of accountability in global sustainable commodity governance: Dilemmas of institutional competition and convergence. Global Policy, 15(5), 838-854. doi:https://doi.org/10.1111/1758-5899.13426
- Mende, J. (2024). Substance-or legitimacy-oriented (de) legitimation of global governance institutions. The double-edged role of complexity. Globalizations, 21(7), 1233-1250. doi:https://doi.org/10.1080/14747731.2024.2330171
- Olteanu, A., Castillo, C., Diaz, F., & K?c?man, E. (2019). Social data: Biases, methodological pitfalls, and ethical boundaries. Frontiers in big data, 2, 13. doi:https://doi.org/10.3389/fdata.2019.00013
- Schmidtke, H., Schirmer, S., Krösche, N., & Lenz, T. (2024). The legitimation of international organizations: Introducing a new dataset. International Studies Perspectives, 25(1), 86-110. doi:https://doi.org/10.1093/isp/ekad008
- Syarkani, Y., Subu, M., & Waluyo, I. (2024). Impact of ESG performance on firm value: A comparison of emerging and developed markets. Commercium: Journal of Business and Management, 2(4), 204-219. doi:https://doi.org/10.61978/commercium.v2i4.367
- Vestrelli, R., Colladon, A. F., & Pisello, A. L. (2024). When attention to climate change matters: The impact of climate risk disclosure on firm market value. Energy Policy, 185. doi:https://doi.org/10.1016/j.enpol.2023.113938
- Zhong, W., & Jin, L. (2025). The Impact of Climate Risk Disclosure on Corporate Green Technology Innovation. Sustainability, 17(6), 2699. doi:https://doi.org/10.3390/su17062699
License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
