IMPACT OF GREEN FINANCING AND ENVIRONMENTAL MANAGEMENT ACCOUNTING ON ESG PERFORMANCE: THE MEDIATING ROLE OF GREEN INTELLECTUAL CAPITAL

Abstract

Purpose: The proposed study examines the effects of Green Financing (GF) and Environmental Management Accounting (EMA) on ESG Performance with Green Intellectual Capital (GIC) as a mediating variable. Part of the Natural Resource-Based View (NRBV) and the Intellectual Capital View (ICV), the study focuses on the key problem of the so-called execution gap between intention to adopt green strategies and realization of high-quality ESG results.

Design/Methodology/Approach: A quantitative, cross sectional survey design was deployed. The structured questionnaire enabled the collection of data of 225 managers, sustainability officers, and finance professionals in Pakistani organizations. The operation of all constructs was done in terms of validated reflective multi-item scales as rated on a five points Likert scale. Measurement and estimation of structural model were done using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SmartPLS 4.0.

Findings: Green Financing and EMA have a significant effect on ESG Performance. Most importantly, the relationship between Green Financing and ESG entirely relies on GIC, including green human, structural, and relational capital, and mediates the nexus of EMA and ESG partially. The model provides an excellent predictive validity as it considers 70.3 of the variance in ESG Performance. These findings uphold the fact that their financial and accounting tools produce their best ESG returns when they are funnelled via organizational green knowledge assets.

Originality/Value: The present study is one of the first to explain both types of antecedents of ESG performance technology, namely finance-driven (GF) and management-driven (EMA), within the same primary-data context, thus making GIC the necessary piece of essential knowledge needed in an emerging economy the picture. Corporate boards, sustainability managers, and Pakistani policy makers of green finance are provided with practical implications.