AI-Powered Innovation Strategies and Governance Structure for ESG Impact & Sustainable Value Creation

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Introduction

In today’s dynamic corporate environment, accounting functions have evolved from technical compliance mechanisms into strategic tools that support board-level decision-making, stakeholder engagement, and the legitimisation of organisational actions. Through corporate reports and ESG disclosures, accounting narratives shape perceptions, influence investment choices, and drive strategic transformation (see Brennan et al., 2023; Angsoyiri et al., 2025; Alkaraan & Hussainey, 2025). This Special Issue aligns with the mission of the Journal of Applied Accounting Research by integrating theoretical rigour and empirical relevance to address real-world practice challenges.

Artificial Intelligence (AI), as a core enabler of Industry 4.0 Technologies (I4.0Ts), is transforming accounting systems, ESG accountability, governance structures, and assurance mechanisms across sectors. Losbichler and Lehner (2021) emphasise the need for integrative frameworks that combine behavioural insights, digital tools, governance theory and policy relevance to unlock AI’s strategic potential for accounting leadership. Emerging technologies, including IoT, blockchain, and predictive analytics, enable real-time ESG monitoring, improved disclosure quality and more informed decisions under uncertainty (Liu et al., 2024; Wang et al., 2023). Tan et al. (2025) further demonstrate that AI and machine learning can uncover latent cultural influences, such as national spirit and media attention, on ESG performance, particularly in private, polluting, and credit-constrained firms. Simultaneously, the growth of FinTech has intensified debates around cost efficiency, risk governance and financial inclusion (Shehadeh et al., 2024; Goel & Kashiramka, 2025), underscoring the role of digital infrastructure in ethical oversight and transparency.

In parallel, Circular Economy Strategic Practices (CESPs) are reshaping business models through waste reduction, resource revalorisation and regenerative value creation (Blackburn et al., 2023). The shift from linear to circular production strengthens long-term ESG performance and competitiveness (Alkaraan et al., 2023), yet their effective implementation relies on robust governance and AI-enabled digital platforms (Marantes et al., 2023). The intersection of CESPs and I4.0Ts within environmental business innovation systems (Env-BISs) remains critically underexplored (Khan et al., 2021; Arroyabe et al., 2024; de Sousa Jabbour et al., 2025).

These developments are unfolding amid increasing policy pressure and global demand for ESG accountability, evidenced by initiatives such as the European Green Deal, COP summits, SEC disclosure rules and ISSB standards. PWC (2022) estimates that ESG assets will rise from $18.4 trillion in 2021 to $33.9 trillion by 2026. Yet ESG assessment remains vulnerable to strategic distortion and symbolic compliance. Internal incentive structures, discursive strategies, and governance mechanisms often clash with regulatory expectations, resulting in inconsistent practices and greenwashing risks (Asteriou et al., 2024; Fan et al., 2025). Lin (2025) finds that stronger ESG profiles attract greater analyst coverage, reinforcing market importance, but links between AI, discourse, governance, and real performance remain fragmented within accounting research.

List of Topic Areas

This Special Issue seeks to advance applied accounting research by examining how AI-powered innovation strategies and governance structures shape ESG credibility, sustainable value creation, and organisational accountability. It moves beyond traditional compliance and explores how AI reshapes reporting, assurance, internal governance, stakeholder communication, and strategic decision-making.

This Special Issue welcomes conceptual, empirical, methodological, and policy-oriented contributions that explore the intersection of AI-enabled innovation strategies, governance systems, and ESG-driven sustainability outcomes. 

Potential areas of inquiry include, but are not limited to, the following:

• AI-supported frameworks for ESG measurement, reporting, and third-party assurance.
• Role of predictive analytics, automation, and textual analysis in aligning ESG performance.
• Influence of governance structures and ethical oversight on sustainable investment and AI adoption.
• Board-level digital governance and its impact on sustainability transitions.
• Strategic integration of Industry 4.0 technologies and ESG objectives.
• Organisational and sectoral differences in AI-ESG integration (e.g., SMEs vs. large firms).
• AI-driven green strategic investment decision-making and capital allocation.
• Impact of AI-powered innovation on environmental sustainability and firm performance.
• Circular economy strategic practices (CESPs) and the transformation of accounting systems.
• AI-enabled internal controls and transparency in sustainability reporting.
• Corporate narrative disclosures and AI-supported strategic accounting communication.
• AI-powered supply chain traceability and ESG accountability mechanisms.
• Curriculum innovation for embedding AI, ESG, and sustainability into accounting and business education.

Guest Editors 

Prof. Fadi Alkaraan, University of Gloucestershire; University of Jordan, FAlkaraan@glos.ac.uk

Prof. Tamer Darwish, University of Gloucestershire, tdarwish@glos.ac.uk

Dr. Muntaser Melhem, University of Jordan, mj.melhem@ju.edu.jo

Submissions Information

Submissions are made using ScholarOne Manuscripts. Author guidelines must be strictly followed.

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Author Guidelines

Authors should select (from the drop-down menu) the special issue title at the appropriate step in the submission process, i.e. in response to “Please select the issue you are submitting to”. Submitted articles must not have been previously published, nor should they be under consideration for publication anywhere else, while under review for this journal.

Key Deadlines

Opening date for manuscripts submissions: 10th December 2025

Closing date for manuscripts submission: 20th March 2026