Digitalization and Financial Reporting of MSMEs in the Green Economy Era: A Review

Abstract

This study conducts an article review to examine how digitalization influences the financial reporting practices of Micro, Small, and Medium Enterprises (MSMEs) within the green economy era. Advances in digital technologies including cloud accounting, blockchain-based systems, and electronic reporting tools are reshaping MSME financial management by improving efficiency, accuracy, and transparency. However, evidence linking digital financial systems with sustainability-oriented reporting remains limited, particularly in developing economies. Using an article review method, this study synthesizes relevant literature published between 2013 and 2025 from major academic databases. The review identifies three core themes: (1) digital adoption and improvements in financial efficiency, (2) enhanced reporting transparency and data reliability, and (3) the integration of sustainability elements through green and ESG-oriented financial disclosure. Findings indicate that digitalization can strengthen MSME financial accountability, support access to green financing, and encourage alignment with Environmental, Social, and Governance (ESG) standards. Nonetheless, challenges persist, including limited digital literacy, insufficient technological infrastructure, and the lack of standardized sustainability reporting frameworks for MSMEs. Overall, the study highlights the need for an integrated digital–financial reporting framework that incorporates ESG indicators to support green digital accounting. The findings provide valuable insights for future research and offer guidance for policymakers in promoting sustainable digital transformation among MSMEs.