Vinculum of Sustainable Development Goal Practices and Firms’ Financial Performance: A Moderation Role of Green Innovation
Abstract
:1. Introduction
2. Literature Review and Conceptual Framework Development
2.1. Firms’ Financial Performance
2.2. Nexus of Sustainable Development Goals Practice and Firms’ Financial Performance
2.2.1. Environment SDGs
2.2.2. Social SDGs
2.3. Green Innovation Practice—Moderation Variable
2.3.1. Green Product Innovation (GPI)
2.3.2. Green Process Innovation (GPI)
2.3.3. Green Organizational Innovation (GOI)
3. Methodology
3.1. Sample and Data Collection
3.2. Content Analysis Procedure
3.3. Instrument Adoption
3.4. Model Development
4. Preliminary Results and Discussion
4.1. Regression Results
Moderation Effect of Green Innovation
5. Implication
5.1. Practical Implications
5.2. Policy-Making Implications
6. Limitation and Future Research
Author Contributions
Funding
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Variable | Measurement Criteria | Data Source | Reference |
---|---|---|---|
Independent Variable | |||
Sustainable development goal | Environmental SDGs | Sustainability reports | (Khan et al. 2021d) |
SDG 6 Clean water and sanitation | |||
SDG 7 Renewable energy | |||
SDG 9 Innovation and infrastructure | |||
SDG 10 Reduce inequalities | |||
SDG 11 Sustainable cities and communities | |||
SDG 12 Responsible consumption | |||
SDG 13 Climate action | |||
SDG 14 Life below water | |||
SDG 15 Life on land | |||
SDG 17 Partnership for the goals | |||
Social SDGs | |||
SDG 1 No poverty | |||
SDG 2 Zero hunger | |||
SDG 3 Good health | |||
SDG 4 Quality education | |||
SDG 5 Gender equality | |||
SDG 8 Good jobs and economic growth | |||
SDG 16 Peace and justice | |||
SDG 17 Partnership for the goals | |||
Moderating Variables | |||
Green Innovation | |||
Green product innovation (GPI) | Product innovation—Green | Sustainability reports | (Das et al. 2000) |
Green product innovation goal | |||
ISO 14001 certification | |||
Disassembly and disposal | |||
Eco-labeling | |||
Lifecycle effect on environment | |||
Continues improvement/innovation | |||
Green packaging | |||
Emission intensity (per product) improvement | |||
Green process innovation (GPRI) | Emission of waste, efficiency of energy, green materials, green technology, emission minimization, and green business certification Inc. (GBCI) | Sustainability reports | (Palčič and Prester 2020) |
Green organization innovation (GOI) | Green building certification, green business certification Inc. (GBCI), and SITES certification | Sustainability reports | GRI |
Dependent Variables | |||
Firms’ financial performance | Return on assets (ROA), and return on equity (ROE) | Annual report and third-party website (Investing.com) | (Xu et al. 2021; Yi et al. 2021) |
Environmental SDGs | Social SDGs | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Continents | G6 | G7 | G9 | G10 | G12 | G13 | G14 | G15 | G17 | G1 | G2 | G3 | G4 | G5 | G8 | G16 | G17 |
Europe | 28% | 43% | 33% | 33% | 32% | 40% | 18% | 33% | 37% | 33% | 37% | 28% | 43% | 32% | 40% | 18% | 37% |
Asia | 39% | 25% | 24% | 20% | 25% | 21% | 27% | 20% | 16% | 24% | 16% | 39% | 25% | 25% | 21% | 27% | 16% |
Africa | 11% | 11% | 14% | 13% | 11% | 12% | 9% | 13% | 21% | 14% | 21% | 11% | 11% | 11% | 12% | 9% | 21% |
North America | 11% | 7% | 9% | 27% | 14% | 12% | 37% | 27% | 10% | 9% | 10% | 11% | 7% | 14% | 12% | 37% | 10% |
Australia | 5% | 7% | 10% | 7% | 7% | 6% | 9% | 7% | 11% | 10% | 11% | 5% | 7% | 7% | 6% | 9% | 11% |
New Zealand | 6% | 7% | 10% | 0% | 11% | 9% | 0% | 0% | 5% | 10% | 5% | 6% | 7% | 11% | 9% | 0% | 5% |
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Independent Variable | Dependent Variable | Findings | Reference | Remark |
---|---|---|---|---|
Green innovation | Sustainable development goals | Green innovation has had a positive impact on the sustainable development goals, community engagement, and improvement of the environment. The backing of the government greatly strengthens green innovation and environmentally sound activities. | (Ullah et al. 2021) | Positive |
Green Innovation reporting | Sustainable development goals | Adopting an ISO 56002-2019 innovation management system has helped companies achieve sustainable development goals. | (Khan et al. 2021d) | Positive |
Sustainable development goals | Financial performance (return on equity) | The results suggest that firms without SDGs have traditionally achieved better FP (i.e., higher ROE). Consequently, the incorporation of SDGs in their strategy leads to a lower ROE. | (Lassala et al. 2021) | Negative |
Sustainable development goals | ESG sustainability practices | The mapping can be used to help comprehend the connections amongst ESG issues, corporate sustainability performance, and the SDGs, as well as to quantify organizations’ progress towards the achievement of SDGs. | (Khaled et al. 2021) | Positive |
Innovation | Sustainable development goals | The results demonstrate that the intensity of cooperative integration, diversification within the organization, market orientation, and achieving Sustainable Development Goals favors the degree of technical innovation. | (Mozas-Moral et al. 2020) | Positive |
Continent. | Country N | Company N | Number of Observations |
---|---|---|---|
Europe | 4 | 19 | 38 |
Australia and New Zealand | 2 | 10 | 20 |
Asia | 4 | 15 | 30 |
North America | 3 | 11 | 22 |
Africa | 3 | 12 | 24 |
Total | 134 |
Variable | Measurement Criteria | Cronbach’s Alpha | Reference |
---|---|---|---|
Independent Variable | |||
Sustainable development goal | Environmental SDGs Social SDGs | 0.73 | (Khan et al. 2021d) |
Moderating Variables | |||
Green innovation | Green process innovation (GPRI) | 0.755 | (Palčič and Prester 2020) |
Green product innovation (GPI) | (Das et al. 2000) | ||
Green organization innovation (GOI) | GRI | ||
Dependent Variables | |||
Firms’ financial performance | Return on asset Return on equity | 0.7 | (Jan et al. 2018; Xu et al. 2021; Yi et al. 2021) |
Variable | Obs. | Mean | Std. Dev. |
---|---|---|---|
ROA | 134 | 5.510 | 4.240 |
ROE | 134 | 16.146 | 8.748 |
ENVTSDG | 134 | 0.330 | 0.348 |
SCOSDG | 134 | 0.322 | 0.326 |
GPI | 134 | 0.320 | 0.235 |
GPRI | 134 | 0.576 | 0.220 |
GOI | 134 | 0.416 | 0.218 |
VARIABLES | (1) | (2) | (3) | (4) | (5) | (6) | (7) |
---|---|---|---|---|---|---|---|
(1) ROA | 1.000 | ||||||
(2) ROE | 0.693 *** | 1.000 | |||||
(3) ENVTSDG | −0.020 * | −0.145 * | 1.000 | ||||
(4) SOCSDG | −0.061 ** | −0.171 ** | 0.792 *** | 1.000 | |||
(5) GPI | 0.094 | −0.022 | 0.250 *** | 0.226 *** | 1.000 | ||
(6) GPRI | −0.071 * | −0.181 ** | 0.299 *** | 0.292 *** | 0.677 *** | 1.000 | |
(7) GOI | 0.108 | −0.025 | 0.069 | 0.033 | 0.624 *** | 0.491 *** | 1.000 |
Return on Assets (ROA) | Return on Equity (ROE) | |||
---|---|---|---|---|
Model 1 | Model 2 | Model 3 | Model 4 | |
Predictors | ||||
ENVTSDG | 8.905 ** (1.99) | 5.094 * (1.89) | 10.031 * (1.09) | 4.545 * (0.81) |
SOCSDG | −10.041 ** (−2.10) | −6.259 * (−1.87) | −15.005 ** (−1.52) | −10.256 * (−1.49) |
Moderators | ||||
GPI | 1.415 * (0.38) | 6.134 (0.79) | ||
GPRI | −5.975 ** (−1.84) | −14.883 ** (−2.20) | ||
GOI | 5.852 ** (1.86) | 6.448 * (0.98) | ||
SDG*GPI | 6.409 * (0.75) | −1.963 ** (−0.11) | ||
SDG*GPRI | 9.331 * (1.06) | 18.598 * (1.01) | ||
SDG*GOI | −15.778 ** (−2.16) | −16.646 * (−1.09) | ||
Constant | 5.805 *** (11.35) | 6.178 *** (3.77) | 17.670 *** (16.79) | 21.141 *** (6.19) |
R-squared | 0.146 | 0.197 | 0.124 | 0.157 |
F-test | 2.23 ** | 2.69 ** | 2.60 * | 1.58 ** |
No. of observations | 134 | 134 | 134 | 134 |
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Khan, P.A.; Johl, S.K.; Akhtar, S. Vinculum of Sustainable Development Goal Practices and Firms’ Financial Performance: A Moderation Role of Green Innovation. J. Risk Financial Manag. 2022, 15, 96. https://doi.org/10.3390/jrfm15030096
Khan PA, Johl SK, Akhtar S. Vinculum of Sustainable Development Goal Practices and Firms’ Financial Performance: A Moderation Role of Green Innovation. Journal of Risk and Financial Management. 2022; 15(3):96. https://doi.org/10.3390/jrfm15030096
Chicago/Turabian StyleKhan, Parvez Alam, Satirenjit Kaur Johl, and Shakeb Akhtar. 2022. "Vinculum of Sustainable Development Goal Practices and Firms’ Financial Performance: A Moderation Role of Green Innovation" Journal of Risk and Financial Management 15, no. 3: 96. https://doi.org/10.3390/jrfm15030096