Abstract: . The article explores the transformation of the financial accounting and reporting system in Ukrainian banks within the context of a transition towards sustainable development. The relevance of the topic is driven by the global proliferation of the ESG concept (environmental, social, and governance factors) in the financial sector, the implementation of the CSRD directive in the European Union, increasing demands for transparency in non-financial information, and the necessity for Ukrainian banks to align with international standards amid the country’s European integration process. Ukrainian banks work in terms of the lack of adequate methodological and regulatory frameworks for the integration of ESG factors into accounting and reporting systems, especially under conditions of wartime and post-war economic recovery. The aim of the study is to identify ways to transform the financial accounting and reporting system in Ukrainian banks on the basis of sustainable development principles, as well as to develop recommendations for improving existing practices and implementing new tools to support this process. The study presents an analysis of European regulatory practices, evaluates the current state of ESG reporting in Ukrainian banks, and provides proposals for changes in reporting frameworks, methodologies, and IT systems. The findings confirm that implementing a sustainability-oriented reporting approach requires comprehensive changes — from accounting methodology to managerial processes and internal controls. A transformation strategy is proposed, allowing banks to mitigate implementation burdens while gradually aligning with European standards. The research highlights the importance of technological readiness, the development of digital infrastructure for ESG data collection, improved reliability of non-financial disclosures, and the introduction of incentives for banks adopting sustainable finance practices. It is established that such transformation will not only facilitate Ukraine’s compliance with international obligations but also enhance trust in the national financial system from both investors and society