Does ESG Impact a Firm’s Sustainability Performance? The Mediating Effect of Firm Innovation Performance

Abstract

In this age of global warming, academics and policymakers are increasingly concerned about firm environmental sustainability success. Therefore, this study aims to investigate whether Environmental, Social and Governance (ESG) performance impacts sustainability performance through the mediating effect of firm innovation. To this end, Structural Equation Modeling (SEM) was deployed to analyze data collected from the employees of manufacturing industries in an emerging economy like Bangladesh. The results revealed that ESG performance significantly enhances the innovation and sustainability performance of manufacturing industries, indicating that the higher the ESG performance of a firm, the greater its innovation and sustainability performance. Furthermore, the results confirmed that firm innovation performance fully mediates the relationship between ESG initiatives and sustainability performance. The findings of this study provide policymakers and industry authorities with valuable insight into the role of ESG and innovation performance in improving sustainability performance. Specifically, the study sheds knowledge on how firm ESG initiatives and innovation performance impact sustainability performance in the manufacturing sector of an emerging economy like Bangladesh.

Financial and non-financial disclosures on sustainable development: The mediating role of environmental accounting disclosure practices

“…Darmayoga et al (2020) found that Indonesian mining companies' environmental accounting disclosures are strong enough to mediate the consequences of environmental performance on company value. Zhou et al, (2023) analyzed Bangladeshi manufacturing companies and found that companies' innovation performance fully mediates the relationship between sustainability performance and environmental social, and governance initiatives. Financial information disclosure is made concisely to comply with standards, rules, and regulations.…”

“…These relationships represent the mediating role of environmental accounting disclosure practices between the disclosure aspects (financial and non-financial) and sustainable development. However, other studies (for example, Monteiro et al (2023), Zhou et al (2023), andAli et al (2022)) use environmental accounting disclosure as a mediating variable to explore the relationship between financial disclosure, non-financial disclosure, and sustainable development. To further extend the knowledge on environmental accounting disclosure and fill the research gap, this study also examines the mediating effect of environmental accounting disclosure practices between financial and non-financial disclosures and sustainable development.…”

Research on Financial Poverty Alleviation Aid for Increasing the Incomes of Low-Income Chinese Farmers

“…According to the theory of sustainable development, the long-term health of a company determines its performance, which is closely related to its ESG performance. Drawing on the theory of Zhou et al, in the past economic development, agricultural entities expanded scale and increased production at the expense of the environment, which caused irreparable harm to the local environment [55]. At a time when more and more attention is being paid to the environment, drawing on the ideas of Chen et al, the main body of agricultural management should transform in the direction of sustainable development without reducing the output in order to meet the call of the state, comply with the development law of green economy, and complete the perfect transformation of the new era [56,57].…”