Sustainability reports are a strategic communication tool between companies and stakeholders to assess commitment to environmental, social, and corporate governance dimensions (Environmental, Social, and Governance (ESG)). However, the practice of preparing sustainability reports in developing countries remains far from consistent and standardized (Ikpor et al., 2022). This lack of standardization is not merely a technical difference but also reflects institutional gaps, organizational capacity, and economic disparities that affect the quality and credibility of sustainability reports.
In the context of globalized reporting, developing countries face a dilemma. They must meet international market expectations for ESG transparency while their legal, technological, and governance ecosystems are not yet mature (Ali et al., 2024). For example, sustainability reports from regions in Asia, Africa, and Latin America exhibit high heterogeneity in format, data depth, and the relevance of issues reported (Borges et al., 2022; Ikpor et al., 2022; Stanislavská et al., 2023; Ali et al., 2024).
Disparities in Global Standards and Frameworks
The Global Reporting Initiative (GRI) has been recognized as a primary guideline, yet its adoption level in developing countries remains inconsistent. Many companies cite GRI without fully adhering to its comprehensive indicators and reporting principles (Kumar & Das, 2020). Even in highly regulated sectors such as energy and banking, companies often produce sustainability reports that combine the GRI format with conventional Corporate Social Responsibility (CSR) reports, resulting in documents that blur the line between philanthropy and strategic sustainability (Arora et al., 2023).
In Southeast Asia, for example, companies tend to prioritize social issues such as community welfare and donations over environmental and governance issues required by GRI (Rustiarini et al., 2024). Some companies in Latin America have begun adopting Sustainable Development Goals (SDG) indicators but with loose interpretation and without methodological consistency (Borges et al., 2022). This leads to fragmentation among countries, where global standards become “mere references” rather than binding implementation guides.
Influence of National Regulation and Institutions
One of the main causes of non-standardized sustainability reporting is differences in regulatory strength across countries. Many developing countries still do not have mandatory policies requiring sustainability reports. Pakistan, Nigeria, and Indonesia, for instance, still rely on voluntary disclosure mechanisms, making reporting more reputational than strategic (Hasan et al., 2022; Ikpor et al., 2024).
India has advanced by implementing Business Responsibility and Sustainability Reporting (BRSR), which requires major listed companies to report ESG indicators (Khalid & Rawat, 2025). Nevertheless, studies show substantial variation across industries in format, depth of analysis, and indicators used (Arora et al., 2023). Institutional weaknesses and limited sanctions make regulatory standards difficult to enforce uniformly.
Gaps in Capacity and Data Infrastructure
Non-standardized sustainability reporting is also caused by limitations in technical capacity and data infrastructure. Small and medium enterprises that dominate the economies of developing countries often lack adequate environmental or social information systems (Darus et al., 2020). In studies of the African mining sector, for example, data collection on emissions and waste remains based on manual estimates rather than measurable metrics (Nyahuna & Swanepoel, 2022).
Limited access to technology and human resources knowledgeable about ESG results in sustainability reports containing more qualitative narratives than quantitative data (Tuan et al., 2023). Without reliable databases, reporting becomes highly subjective, depending on internal capabilities and management preferences.
Diverse Interpretations of Sustainability Reports
Beyond technical aspects, developing countries also face diverse interpretations of the concept of “sustainability.” In many companies in Asia and the Middle East, ESG reporting is often understood as part of religious or cultural social responsibility (charity-oriented CSR), rather than a sustainable business strategy (Gautama et al., 2021).
This results in sustainability reports emphasizing social activities, donations, and moral obligations, while aspects like environmental risk reduction, energy efficiency, or green innovation are often neglected (Saha & Nabareseh, 2015). These differing interpretations deepen non-standardization across countries because not all corporations understand sustainability as a measurable, indicator-based concept.
Weak Assurance and Validation Mechanisms
Another factor that worsens non-standardization is the lack of independent verification of sustainability reports. Companies in developing countries rarely use sustainability assurance services due to high costs and a shortage of professional providers (Hassan et al., 2020). Without external validation, sustainability reports are vulnerable to managerial bias and greenwashing (Cicchiello et al., 2025).
The absence of assurance makes reports difficult to compare across companies because there is no guarantee that data are prepared using uniform methodologies. This situation also reduces investor and international financial institution confidence in ESG claims from developing countries (Hamidah & Naimah, 2025).
Thematic Fragmentation Across Sectors and Countries
Non-standardization occurs not only between countries but also across industry sectors. The banking sector, for example, highlights green banking and financial inclusion (Deepthi Varsha Devi & Uma, 2025), whereas the manufacturing sector emphasizes energy efficiency and waste management (Trần et al., 2025). These sectoral orientations make indicators difficult to align.
Additionally, differing national development priorities exacerbate fragmentation. Resource-dependent countries such as Indonesia and Nigeria tend to emphasize conservation issues, while countries like Vietnam and India focus more on social and labor issues (van Linh et al., 2022; Arora et al., 2023). Consequently, although the theme of “sustainability” is similar, the substance and metrics reported are highly heterogeneous.
Lack of Integration with National Development Goals
Some sustainability reports in developing countries are prepared corporately without linking their indicators to the SDGs. Only a small portion of companies in Indonesia explicitly map their business contributions to the SDGs (Kuswantoro et al., 2023). Yet such integration could create alignment between public policy and business practices.
The lack of standardization in this integration means that ESG reporting is not always useful for national development planning or SDG reporting to the UN (Santiago-Castro, 2025). Governments lose the opportunity to use corporate reports as an accurate and up-to-date complementary data source.
Consequences for Credibility and Competitiveness
Non-standardization has a direct impact on global market perception. Institutional investors tend to view sustainability reports from developing countries as having higher information risk and lower comparability than reports from developed countries (Itan et al., 2025). This negatively affects access to green financing or international ESG investment schemes.
Moreover, differences in reporting methodology create confusion for rating agencies and consultants assessing ESG performance across countries. As a result, developing countries often lag in global sustainability indices—not because of poor ESG performance, but because of inconsistent data and standards (Walsh et al., 2021).
Harmonization Efforts and the Way Forward
Ultimately, the biggest challenge for developing countries is not merely producing a sustainability report that “looks complete on paper,” but turning it into an instrument of real change in corporate governance and economic development. A sustainability report should reflect ethical commitment, not just administrative formality.
True transparency requires systems capable of credibly measuring social and environmental impacts, so that reporting serves as a foundation for public trust and evidence-based decision-making (Darus et al., 2020).
Amid capacity constraints, cultural diversity, and global market pressures, the way forward for developing countries is to create inclusive standards of practice that adapt to local contexts while still meeting international expectations (Stanislavská et al., 2023). However, harmonization is not achieved by regulation alone — it requires continuous capability building, fiscal incentives for companies adopting international reporting standards, and partnerships with professional audit institutions.
Some initiatives point to positive moves toward harmonization. The International Sustainability Standards Board (ISSB) has opened public consultations encouraging active participation from developing countries in setting global reporting standards (Kulik & Dobler, 2023). Meanwhile, multilateral financial institutions have begun requiring standardized ESG reports as conditions for project financing (Suprapto et al., 2024).
In this context, Hikmah & Arief Public Accounting Firm (KAP Hikmah & Arief) acts as a partner providing comprehensive sustainability reporting services aligned with global standards such as GRI and ISSB and oriented toward achieving the SDGs. With an analytical and data-driven approach, KAP Hikmah & Arief helps companies turn sustainability reports into not just compliance tools but leadership strategies that reaffirm commitment to social responsibility, global competitiveness, and long-term sustainability.
Author: Riajeng Rizqi Amalia, ST., MT.
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