The interconnection between decent workplace and firm financial performance through the mediation of environmental sustainability: Lessons from an emerging economy

Abstract

This study aimed to investigate the impact of some important Sustainable Development Goals (SDGs), such as the decent workplace, climate change, and economic sustainability on firm financial performance (see Goals 8 and 13). By adopting an index from the previous literature, this study collected data from the annual and sustainability reports of the publicly listed companies of a developing country through content analysis from 2016 to 2018. The results revealed a significant increase in the level of compliance with workplace and environmental sustainability during the corresponding period. Furthermore, the estimations of ordinary least squares (OLS) and two-stage least squares (2SLS) panel data also unveiled a positive impact of workplace sustainability on the firm’s environmental and financial performance. Additionally, we noted that the findings were pronounced after addressing the problem of endogeneity. Moreover, the study also found a novel significant and positive mediating role of environmental sustainability in the relationship between workplace sustainability and the firm’s financial performance. This study has theoretical significance by proposing sustainability training and development as instrumental variables in the relationship of the workplace and environmental sustainability to firm financial performance. This study offers practical implications for regulatory bodies and business firms to integrate workplace and environmental sustainability practices into their routine operations for achieving sustainable industrialization.