ESG performance metrics landscape: Examining sustainable leadership, stakeholder engagement and organizational characteristics

Abstract

The present study investigates the influence of sustainability leadership, stakeholder engagement and organizational characteristics on Environmental, Social, and Governance (ESG) metrics within organizations. Structural Equational Modelling—partial least squares (SEM-PLS) was used as a statistical tool to demonstrate the study's landscape. A sample size of 382 was employed for the research. The results illustrate that sustainability leadership positively influences ESG performance metrics. The findings show that measures of ESG performance are enhanced by sustainability leadership. Stakeholder engagement similarly acts as a mediator to improve performance criteria. Conversely, organizational characteristics help moderate the relationship between sustainable leadership and stakeholder involvement influencing ESG performance indicators. Moreover, this research emphasises that organisations with strong sustainability leadership are not only more likely to get favourable ESG results but also encourage innovation, lower running risks, and enhance long-term financial success. Emphasising stakeholder involvement helps to improve organisational resilience and responsibility, hence promoting more open decision-making procedures. This paper also investigates the difficulties companies have including incorporating sustainability principles emphasizing the requirement of adaptable tactics and cultural transformation. In addition, it shows that although organisational characteristics decrease this relationship, additional research is required to thoroughly understand their contribution to improving ESG results. The knowledge acquired from this study guarantees that companies trying to remove obstacles to sustainability match worldwide ESG criteria and objectives, thereby offering valuable directions. These results will enable companies to raise ESG performance and strategically implement more sensible sustainability policies.