The role of non-financial reporting and ESG principles in legally balancing the private and public interests of Russian companies

Abstract

The implementation of non-financial reporting and ESG (Environmental, Social, Governance) principles is becoming a key factor for the sustainable development of Russian companies, yet this process faces serious challenges due to the lack of clear legal regulation. Often the disclosure of ESG information is purely formal and used for image purposes rather than as a genuine tool to ensure a balance between private commercial goals and the public interests of society. This study aims to analyze the role of non-financial reporting in legally securing this balance, assess the current practice of its application in Russian companies, and identify shortcomings in the legislative framework. Open data from non-financial reports of large Russian companies, analytical materials, and expert interview results were used for the analysis. The research methodology is based on an integrated approach combining qualitative and quantitative methods: content analysis of reports, comparative analysis by industry and business scale, and regression analysis to identify relationships between the level of ESG disclosure and financial performance. This approach allowed us to evaluate not only the formal aspects of reporting but also the actual level of companies’ engagement in ESG transformation. The study’s findings reveal a significant gap between declared ESG initiatives and their systematic integration into corporate strategies. The analysis shows that although social projects are the most popular (47,3% of companies are actively involved), strategic integration of ESG remains low (35,6%). There is a marked lag of small and mediumsized enterprises behind large corporations, as well as uneven development of ESG practices across different industries. A moderate correlation was found between company size and ESG engagement, but a weak link between company size and the completeness and quality of published non-financial reporting, indicating a formal approach to its preparation. The research confirms that the absence of unified standards and effective legal control mechanisms is the main obstacle to transforming non-financial reporting into an effective instrument for balancing interests. To address this issue, legislative improvements are needed, including the introduction of mandatory audits of non-financial information, standardization of disclosure requirements, and creation of incentive schemes for companies demonstrating real achievements in sustainable development. Only a comprehensive legal approach will ensure transparency and reliability of ESG data, contributing to the formation of a responsible and competitive business environment in Russia.