Integrating ESG Data into Management Accounting for Corporate Risk Management: Evidence from Kazakhstan

The scale of ESG reporting is expanding more rapidly than the internal application of such data for management accounting and financial risk assessment, particularly in emerging markets. This study examines the relationship between ESG metrics and corporate financial risk, drawing on balanced panel data from six major Kazakhstani companies for the period 2017–2024. Financial risk is assessed as a multidimensional category through two channels: debt burden (financial leverage) and the ability to generate cash (free cash flow, or FCF, margin). Panel modeling of normalized ESG metrics reveals that these metrics vary in their significance regarding financial risk, with specific connections emerging between individual ESG factors and financial risk. Carbon intensity shows a significant positive correlation with financial leverage, indicating that debt-related risk is closely tied to environmental factors. Employee turnover exhibits a significant negative correlation with the FCF margin – a consistent pattern across both models – underscoring how personnel instability affects a company’s ability to generate cash flows. Meanwhile, the proportion of independent directors shows negative, yet statistically insignificant, coefficients in both models. These findings provide a foundation for risk-oriented ESG analysis, in which the importance of specific metrics is determined by the particular financial risk channel they influence, rather than through their mechanical aggregation into a single, unified index. The study broadens the analytical scope of managerial accounting, demonstrating that ESG data can be transformed from mere reporting information into a tool for the differentiated assessment of corporate risks. The results point to an association – rather than a direct causal relationship – between ESG factors and financial risk. These findings pave the way for the further evolution of ESG analytics, shifting from generalized assessments toward empirically grounded models. This approach makes it possible to account for the heterogeneity of ESG factors and the mechanisms through which they relate to various components of corporate financial risk.