Environmental and Social Performance of the Banking Industry in Bangladesh: Effect of Stakeholders’ Pressure and Green Practice Adoption

Abstract

The concepts of Stakeholders’ Pressure (SP), Environmental Performance (EP), and Corporate Social Performance (CSP) are well established in the business of progressive firms. However, firms are yet to examine the effects of Stakeholders’ Pressure (SP) on environmental performance (EP) and Corporate Social Performance (CSP) by connecting the missing linkage of Green Practice Adoption (GPA). The present study explored the association between Stakeholders’ Pressure (SP), Environmental Performance (EP), and Corporate Social Performance (CSP) through the mediating effect of Green Practice Adoption (GPA). The study’s objective was to determine the factors to propose a model for the environmental and social performance of the banking industry in the Bangladesh context. The study assessed the hypotheses using partial least squares-based structural equation modeling with data from 540 line managers from 30 private commercial banks. The results indicate that SP significantly improves EP, CSP, and GPA. On the other hand, GPA showed a substantial accepted effect on EP and CSP. Furthermore, mediation analysis showed that GPA mediates the relationship between SP with EP and CSP. This research fills the gap in the domain of the Environmental and Social Performance of the Banking Industry in Bangladesh. From this study, the academicians may get fresh antecedents of the environmental performance management approach. Thus, the study’s outcomes may give valuable insights to policymakers and managers and provide them with practical evidence to proactively implement SP in firms because such practices positively impact EP and CSP through the mediation of GPA. This result may improve operational efficiency and provide firms with a superior reputation.

1. Introduction

Since businesses are being pressed harder than ever by a wide range of stakeholders to safeguard the environment, managing and minimizing the damaging consequences of commercial operations on the environment has emerged as a critical global issue. SP is a key element of environmental governance, particularly in developing nations, and is quickly becoming a tool for discouraging organizations from taking part in environmental preservation [1,2]. In response to minimizing the negative environmental outcome of organizational operations, stakeholders emphasize International Organization for Standardization (ISO) certification in relation to the environment [3,4]. The worldwide environmental standard ISO 14001 has two fundamental purposes: first, it acts as a tool for environmental management; and second, it alerts stakeholders to a company’s improved environmental performance. Previous studies also examine the stakeholders’ encouragement of ISO certification, as foreign clients and neighbourhood stakeholders are crucial in promoting the spread of ISO 14001 certification [5,6]. As with environmental issues, organizations gradually understand the benefits of social responsibility and eco-friendly methods in reacting to external problems to decrease the adverse impact on the environment and promote sustainability [4,7]. In the past, it was claimed that investing in CSR and enhancing environmental initiatives may increase costs, inefficiency, and production losses [8,9]. However, an increasing understanding of CSR and EP indicates that both could be sources of competitiveness and long-term success [10]. Existing research showed SP as the main cause of business environmental practices [11,12].

Evidence from diverse stakeholders’ demands and the application of effective environmental policies are positively correlated, according to stakeholder theory (ST) and empirical data [13,14]. Additionally, SP would raise stakeholders’ awareness of environmental challenges, a sense of social responsibility, and ecological expertise [15,16]. According to the firm resource perspective, modern firms need to build green initiatives across the board to advance crucial organizational knowledge for implementing environmental policies [17,18].

Most notably, contemporary sustainability studies have recognized the importance of using stakeholder theory to comprehend the drivers behind the adoption of green measures. This theory’s applicability is due to how common and uniform certain green behavioral patterns have grown among institutions with a connection to social and environmental performance. This is due to the fact that as green business practices proliferate within a sector, they become established norms and values and, as a result, players or stakeholders in the firm’s external environment [19,20].

Under pressure from stakeholders, businesses can adopt green practices that improve their social and environmental performance while reducing pressure from stakeholders such as consumers, employees, the government, the media, and various non-governmental organizations (NGOs) [21]. Involving stakeholders can also improve a company’s ability to integrate green strategy, innovation, and environmentally friendly practices [22,23]. It suggests that by using internal resources and connected actors, businesses can successfully integrate their internal resources. Organizations must utilize green practices and innovation as they face increasing demand to improve their operational, technological, and social capacities [24,25].

Prior literature showed the mixed results of the stakeholders’ pressure on green practices adoption and its mediation effect on the relationship between stakeholders’ pressure and social and environmental performance. For example, the Central Bank of Bangladesh’s 2011 publication of green banking regulation guidance had a favorable impact on how much information was disclosed [26]. Pressure from stakeholders has a big impact on internal green management and green product/process design. Further, the relationship between stakeholders’ pressure and environmental performance is entirely mediated by green product/process design [27]. The green practice adoption was discovered to have a partial mediation effect between CSR and performance, whereas the mediating relationship between CSR and employees’ pro-environmental behavior (PEB) at work was discovered to be insignificant [28]. It has also been revealed that green creativity significantly mediates the relationships between green knowledge and environmental performance, as well as between green transformational leadership and environmental performance [29]. Green creativity also plays an insignificant mediating effect between proactive green innovation and green product development performance [30]. However, the mediating effect of green practice adoption between stakeholders’ pressure and social and environmental performance was paid no significant attention in prior studies.

Due to this, while dealing with uncertain events in the current business environment, SP may serve as both a driver and an indication of sustainable development. Through innovative networks, businesses’ interactions with stakeholders become a crucial source of creative resources. According to earlier studies, many stakeholders put pressure on organizations to invest in green initiatives to reduce ecological risk [31]. Many research studies have shed light on the influences of stakeholders on adopting ecological practices [14,32], ESG (environmental, social, and governance) performance and financial performance [33], green export business strategy [34], CSR commitment [35], disclosure of environmental information [12], and environmental competitiveness [36].

However, research on how SP affects organizational, environmental, and social performance via the mediating effect of green practice adoption is still lacking.

There is a fundamental research query that should be examined—can SP affect environmental and CSR performance through implementing green practices? As per this query, this study aims to inspect the following research questions (RQs):

RQ1. In what ways does SP impact social and environmental performance?

RQ2. How does SP influence firms to adopt green practices?

RQ3. Does GPA mediate the relationship between SP and social and environmental performance?

The authors used partial least squares structural equation modeling (PLS-SEM) to address the above RQs and hypotheses pertaining to green practices and social and environmental performance. Further, to explicate the nexus among stakeholder pressure, green practices adoption, and social and environmental performance, we have used the stakeholder theory to shed light on the direct and indirect effects of stakeholder pressure, green practices adoption, and social and environmental performance.

The framework for the current research was developed in response to these realities. Now the big question is how SP can affect environmental and CSP performance through implementing green practices.

We want to investigate the specifics of how adopting green practices affects SP as well as environmental and social performance. Therefore, we offer the research framework in Figure 1.

In light of this, the current study develops a theoretical model to analyze the extent to which SP will influence enterprises’ CSP and environmental actions from the standpoint of adopting green practices. More specifically, this study outperforms earlier research on adopting green practices, CSP, and environmental performance in several ways. First of all, we examine—using stakeholder theory—the effects of stakeholder pressure on the adoption of green practices and the improvement of social and environmental performance. Second, it is clear that very little thought has been given to how SP acts to encourage an organization to implement environmental performance, CSP practices, and the adoption of green practices. The function of stakeholders’ engagement is widely known in the management literature. Additionally, the direct impact of adopting green practices on EP and CSP is assessed. Third, this study will fill a gap in the literature by introducing the adoption of green practices as a novel mediating concept in the connection between SP, CSP, and environmental performance. Lastly, this study adds to the existing knowledge about adopting green practices and EP as a combination of inventive capacities for sustainability. We used data gathered from Bangladesh’s banking sector to evaluate our study model because there has not been much previous literature exploring SP in the context of adopting green practices and environmental practices. The article’s remaining sections include the theoretical underpinnings, literature review, and formulation of hypotheses. These are followed by the study methodology, data analysis, the hierarchical model of stakeholders’ pressure, measurement model, structural model, and, finally, discussions and conclusions.

2. Literature Review and Hypotheses Development

2.1. Stakeholder Theory (ST)

Emerging economies rarely provide empirical data on social and environmental sustainability; therefore, research is required to generalize the results for theory and practice [37]. We research the stakeholder theory in order to address this. Stakeholder theory is related to CSR, which incorporates multiple levels of social and environmental responsibility and encourages businesses to take part in their operations [38]. Stakeholders are a group of people who have diverse interests in an organization. Ref. [39] defined stakeholders as “any group or individual who can affect or is affected by the achievement of an organization’s purpose”. Therefore, Businesses have obligations to their shareholders as well as to society.

Stakeholder theory states that executives should put the interests of all parties involved—not just shareholders and society—ahead of their own. Managers must also consider other stakeholders when making decisions, including employees, customers, suppliers, the welfare of communities, regulators, groups, organizations, competitors, the media, society, and environmental organizations. This implies that stakeholders’ influence on business decisions means they have power. The ability of a stakeholder to exert pressure on a firm’s decisions is referred to as stakeholder pressure [40]. Stakeholder pressures are divided into four categories: internal, coercive, commercial, and social pressure [41]. On the basis of earlier research, stakeholders can be divided into internal and external stakeholders. Existing research further classifies external stakeholders into primary and secondary external stakeholders based on how closely they are related to a firm’s operational activities [42]. Primary external stakeholders are those who are not employed by the company but are interested in or impacted by its decisions and results. Suppliers and customers are the two primary categories of external stakeholders in general. Through transactions, suppliers and customers have an impact on a company’s earnings and are viewed as co-creators of service values [43].

Stakeholders within an organization are described as such because they are essential to its existence and are the people for whom it was founded. This group consists of stockholders, partners, and clients, as specified by [44]. Recently, stakeholder pressures have received a lot of attention, and many businesses have adopted green production methods as a result of these pressures [19]. The key stakeholders’ pressures (customers, rivals, employees, and government) have a big impact on business environmental strategies [45]. Therefore, firms achieve sustainable benefits through the integration of social activities and environmental performance management [46]. Similarly, a firm’s sustainability depends on the integration of environmental, social, economic, cultural, and organizational activities [47]. In addition, corporate social performance towards stakeholders (community) increases a firm’s financial performance [48]. Also, stakeholders’ engagement influences a firm’s sustainability performance [49]. However, SP does not influence social performance [50].

The section of the theory, which is built on four key premises [51], first demonstrates that corporations have relationships with a wide range of stakeholder groups, all of which have an impact on or are affected by the actions made by the companies [39,52]. It also demonstrates the company’s ability to properly distribute the advantages and risks of its decisions in accordance with its affirmative duty to stakeholders [53,54].

Recent occurrences have significantly widened the stakeholders’ perspective on environmental issues, and organizations are now under more ecological pressure from different stakeholders to establish strategies, practices, and policies that are in line with the organizational ecological aims [27]. Numerous environmental studies have used the stakeholders’ idea, and, as a result, stakeholders have had a significant impact on business ecological responsiveness [55] and environmental strategies [56,57]. This theory is an explanatory idea linked to antecedents from implementing various ecological policies [44,58].

2.2. Sustainability Performance

Sustainability performance is the alignment of financial, social, and environmental goals in the execution of core business actions to maximize value. For a business to succeed in a fierce market, sustainable business performance is essential [40]. A firm’s operation largely depends on stakeholders’ pressure because a stakeholder is a person or group of people who have the power to influence or be affected by a company’s operations throughout the full value generation process [39]. Pressures from organizational stakeholders have a favorable and significant impact on the adoption of green manufacturing techniques, the standing of the company, and environmental performance. Green practices are a strategy for reducing waste production, reducing pollution during product manufacturing, efficient energy use, eco-design, eco-purchasing, and green product development. Also, green production techniques have been shown to have a significant and positive impact on a company’s performance in terms of the environment [14].

2.3. Environmental Performance

Environmental performance refers to factors such as the utilization of renewable resources, increased reuse and recycling, improved energy and water efficiency, reduction of air pollution and greenhouse gas emissions, and elimination of toxic and hazardous waste. Due to tremendous economic growth, environmental degradation and ecological destruction have gotten worse over time. In Bangladesh, environmental issues are getting more attention. Investors, authorities, and the general public are pressing companies to perform better in terms of the environment and to provide more environmental disclosures due to increased understanding [41]. Therefore, a firm’s performance depends on proper environmental management. The performance of the stock is highly influenced by environmental performance [59]. Similarly, the success of a company is strongly correlated with its social and environmental performance [60].

According to [42], environmental information disclosure (EID) encourages businesses to cut back on pollutant emissions, control organizational and environmental protection behaviors, and enhance environmental performance. Long-term environmental performance can have a favorable impact on green innovation in non-emerging nations and nations with better environmental performance [61]. Environmental performance is enhanced by both green intellectual capital and environmental management accounting. Further, the relationship between green intellectual capital and environmental performance is mediated by environmental management accounting [62]. Internal lean practices (ILP) are strongly and favorably related to social and environmental performance. Additionally, it was discovered that social performance partially and totally mediates the impact of ILP on environmental performance as well as the relationship between ILP and operational performance [63]. A firm’s international orientation (IO) is likely to enhance its environmental performance since internationalization increases a firm’s exposure to worldwide best practices in the context of environmental management [64,65]. The interaction between IO and environmental performance is mediated by environmental commitment [66]. The influence of environmental entrepreneurial orientation on environmental innovation is favorably moderated by stakeholder pressure, and environmental entrepreneurial orientation affects company performance through environmental innovation [67].

2.4. Social Performance

The phrase “Corporate Social Performance” (CSP) refers to the principles, practices, and outcomes of how organizations interact with people, organizations, communities, societies, and the environment, as well as the intentional and unforeseen effects of their operations. The definition of CSP is “a construct that emphasizes a company’s responsibilities to multiple stakeholders, such as employees and the general community, in addition to its traditional responsibilities to economic shareholders”. [68]. CSP depends upon the firm’s corporate social responsibility (CSR). CSR refers to firms having a duty to society and a wider range of stakeholders than just their shareholders, which became popular in the 1960s [43]. Companies have embraced the idea of CSR because they feel they should “give back” to society. CSR is a priority area for many businesses to show stakeholders that they care about social and environmental issues. CSR appears to be connected to the three pillars of sustainable development, such as economic, social, and environmental issues [44,45]. There is a strong and positive correlation between CSR commitment and social and environmental performance [69]. Likewise, corporate social performance (CSP) is the performance result of a company’s CSR endeavors [70]. According to both the stakeholder theory and the resource-based theory, the economic and social activities of businesses (e.g., CSR) are influenced by stakeholder expectations and resource usage, which in turn affects many performance factors such as CSP [71]. Ref. [72] investigates the connection between managerial effectiveness and CSR results. The findings show a correlation between managerial effectiveness and changes in corporate social performance (CSP). A more reliable indicator of CSP awareness is a company’s array of charitable endeavours (

Table 1. Summary of research work on environmental and social performance.

Authors (Year)	Focus	Sample	Relevant Findings
Alt et al. (2015) [32]	Environmental performance	Survey questionnaire to 1921 firms	Proactive environmental strategies (PES) were positively and significantly connected to employee stakeholder integration, and PES were positively and significantly related to environmental performance. This relationship was prominent for high levels of shared vision.
Helmig et al. (2016) [40]	Corporate Social Responsibility	survey questionnaire to 1000 top managers	Primary stakeholders Pressure increases CSR implementation.
Baah et al. (2020) [19]	Green production practices and environmental performance	Data collection through email (226 questionnaires from SME)	Pressures from organizational stakeholders had a favorable and significant impact on the adoption of green manufacturing techniques, the standing of the company, and environmental performance.
Graham (2020) [74]	Environmental Supply Chain Practices	149 manufacturing companies	Competitive pressure and proactive strategy have separate and combined effects on supply chain environmental practices.
Rehman et al. (2020) [75]	Green banking and environmental performance	Survey questionnaire 200	The effect of green practices has been documented to be much greater and significant in stimulating green environment.
Rui & Lu (2020) [76]	Environmental ethics and green innovation	Survey 278 enterprises	Stakeholder pressure can support green innovation and corporate environmental ethics.
Shahzad et al. (2020) [16]	Environmental practices	Survey from 318 respondents of the manufacturing industries of Pakistan	Stakeholder pressure significantly improves green innovation, CSR, and knowledge management processes.
Sutantoputra (2020) [12]	Environmental disclosure	Case study (9 companies have taken)	Stakeholders (customers, investors) influence more environmental disclosure.
Khuong et al. (2021) [49]	Stakeholders and Corporate Social Responsibility	Surveys of 869 leaders and managers	Stakeholder influence has a favorable impact on business reputation in addition to having a big impact on CSR kinds.
Rhee et al. (2021) [51]	Stakeholder Pressures on Strategic CSR Activities	Survey data of 177 Korean foreign subsidiaries	Secondary stakeholders have a greater impact on strategic CSR initiatives than on reactive ones.
Bıçakcıoğlu-Peynirci & Tanyeri (2022) [34]	Green export business strategy’s results	235 questionnaires were collected from exporting manufacturing companies	The organizational competencies, stakeholder demands, and resources all significantly affect the green export business plan.
D’Souza et al. (2022) [38]	Social and environmental responsibilities	Face-to-face interviews (286 from social businesses)	Primary stakeholders and secondary stakeholders have a significant impact on social responsibility. Secondary stakeholders were found to have a considerable influence on environmental responsibility, even when primary stakeholders had an indirect influence.

) [73].

2.5. Stakeholders’ Pressure and Environmental Performance

According to ST, the impact of various stakeholders may increase a company’s willingness to actively examine ecological concerns and push them to adopt environmentally friendly practices [74,77]. Businesses frequently experience a variety of escalating environmental challenges from many stakeholder groups, including customers [78,79]. Customers have continually pushed companies to adopt environmentally friendly practices and to produce eco-friendly products because they are the direct victims of polluted settings [80,81].

Businesses may be reluctant to implement environmental practices if they are unaware of any stakeholder group demands, which could lead to subpar EP [82]. A regulatory agency makes laws, rules, and recommendations available to organizations so that they can do business without endangering the environment. To increase EP through corporate operations, regulatory stakeholders put strict environmental restrictions on enterprises [76,83]. Another stakeholder, such as employee pressure to enhance internal green management, which is steadily proven as an effective and comprehensive technique for achieving superior EP, is a result [84,85]. Managers have adopted various strategies for EP, such as creating new facilities and machinery that significantly minimize pollution during production and foster goodwill among stakeholders. This will enhance EP, benefiting the environment and the economy in the long run [86,87]. Competitors put pressure on businesses to implement programs such as reverse logistics, green purchasing, and design for the environment [88].

Despite theoretic agreements from scholars [44], there is no concrete evidence that stakeholder pressures improve EP. Researchers have yet to come to a definite decision regarding how SP affects a firm’s EP [89]. Based on previous studies, it is argued that SP may improve EP. Thus, we suggest the following hypothesis based on the empirical evidence and theoretical discussion:

H1. 

SP has a significant positive impact on EP.

2.6. Stakeholders’ Pressure and Corporate Social Performance

Due to stakeholders’ demand for ecological and social issues, the concepts of “social performance” and “environmental performance” have evolved as difficult phenomena in recent decades. One of the most difficult obstacles in the strategic management of corporate social performance (CSP) is likely to be the variety of stakeholders and various social and environmental issues; to address this challenge, many businesses trade off the interests of stakeholders [90]. Companies can gain a great deal from CSP profiles that show balanced attention to all of their stakeholders, which is consistent with the instrumental stakeholder theory [39,53]. There is a strong and positive correlation between CSR commitment and social and environmental performance [69]. The need of all sorts of firms to engage in corporate social responsibility (CSR)-related activities to fulfill their environmental, social, and economic obligations for the development of social performance grows in response to environmental and ecological demands from diverse stakeholders [91]. The social performance of businesses is improved through external pressure and CSR integration into core business operations [92]. From the above discussion and stakeholder theory, it can be realized that there is some relationship between stakeholders’ pressure and CSP. Hence, we hypothesize:

H2. 

Stakeholders’ Pressure (SP) significantly and positively impacts corporate social performance (CSP).

2.7. Stakeholders’ Pressure and Green Practice Adoption

Many firms are focused on eco-design initiatives (part of green practices) to improve EP. Earlier research shows that regulation, social responsibility, and eco-design initiatives all positively impact the environment. The most significant factors influencing the adoption of GP are managerial concerns, governmental regulations, and firm size [93,94]. Most businesses seem to be more motivated internally to adopt GP than externally, with cost and competitiveness issues taking precedence over social responsibility issues. If a company adopts GP, stakeholders will profit because it will improve both the environment and the business’s performance. A company can become competitive and profitable using GP [95,96]. Pressure from consumers and regulators has a larger favorable impact on the invention of green products [76,77]. Based on the findings of empirical studies and stakeholder theory, it can be said that companies are attempting to adopt GP in order to handle the increasing environmental concerns coming from different stakeholder groups. Thus, we suggest the following hypothesis:

H3. 

Stakeholders’ pressure is positively related to green practice adoption.

2.8. Green Practice Adoption and Environmental and Social Performance

Green banking procedures consider ecological considerations when conducting their business to promote environmental sustainability and efficient use of natural resources. It reduces paperwork and raises business people’s understanding of the environment and society [2,97]. Additionally, green banking has several advantages for both businesses and society. For instance, it lessens deforestation, raises customers’ and employees’ awareness of environmental issues, integrates environmental practices into core business operations, and offers loans at lower interest rates to purchase environmentally friendly goods [98]. The environment has greatly benefited from actions taken on various green concerns, such as carbon credit businesses, green mortgages, carbon footprint reduction, green financial products, green buildings, and energy awareness [99,100]. So, previous empirical evidence and stakeholder theory influence us to propose the following hypothesis:

H4a. 

Green practices have a positive relationship with environmental performance.

Green practices serve social interest. According to the green hypothesis, an organization’s ability to function holistically and care for society will inevitably have an impact on its internal green practices [28]. Many of the factors that influence the adoption of green practices come from a variety of external and internal “stakeholders” [101], such as regulatory bodies [102], competitors, internal factors, supply chain participants (customers and suppliers) [103], community organizations, and product and internal processes, as well as from organizational culture that encourages businesses to act in an environmentally responsible manner to meet social demands [88]. Customers and end users are becoming more environmentally conscious and gravitate toward green products [104]. Green innovation affects economic, social, and environmental performance [105]. Recent studies in Vietnamese construction material manufacturing companies have discovered a beneficial association between green supply chain management (GSCM) practices and environmental management, further supporting the idea that doing so would increase an organization’s sustainable (economic, social, and environmental) performance (Le, 2020) [106]. Green practices and productivity performance have been perceived as being traded off in the relationship between environmental safety and company strategy [107], which may influence social performance. From this discussion and the knowledge of stakeholder theory, green practices are expected to be related to CSP. Hence, we can hypothesize:

H4b. 

Green practices have a positive relationship with CSP.

2.9. Green Practice Adoption (GPA) as a Mediator

One of the key approaches and preconditions for organizations to improve organizational performance is green practice adoption (GPA), which is also adept at identifying new avenues for sustainable development [95,108]. Firms should begin to embrace GP widely to improve environmental and social performance. Thus, when top management makes investments in environmentally friendly and green products, a link between GPA, EP, and CSR becomes apparent. In this situation, organizations should highlight and include strategies relating to adopting green practices in this environment to accomplish sustainable objectives. Implementing green banking practices is significantly influenced by policy, daily operations, and investments [75]. According to the most recent study, GPA is particularly important for improving EP and meeting social requirements, contributing to corporate sustainability. From the above discussion, it is apparent that SP, GPA, and environmental performance are interrelated. Thus, we hypothesized:

H5a. 

GPA mediates the relationship between SP and EP.

In contrast, many businesses dedicate a portion of their CSR budget to enhancing EP to satisfy stakeholders’ demands. In this regard, organizations use CSR funds to develop eco-friendly products and integrate their practices into their daily business operations. Green processes and product innovation are strongly supported by CSR practices [109]. However, managers who take the initiative may believe they are improving social well-being, but their environmentally friendly choices end up having the opposite effect [110]. CSR is a motivator for the adoption of Green IT [111]. CSR positively impacts an organization’s commitment to sustainability and its capacity for environmental adaptation [112]. A model developed by [113] takes into account the need for CSR practices within the business to increase environmental awareness due to the carbon-intensive activities taking place throughout their transportation and distribution network. CSR does not directly or significantly influence EP, but it is strongly connected with environmental strategy and green innovation, which both enhance EP [114]. The above discussion shows that SP, GPA, and social performance are related. Thus, we hypothesize:

H5b. 

Green practice adoption mediates the relationship between SP and social performance.

3. Methodology

This study considered line managers of Bangladesh’s listed private commercial banks (PCBs). We surveyed a sample of 540 line managers from 30 PCBs with a structured questionnaire to obtain information pertinent to the research objectives.

We concentrated on this sample for two purposes: First, private banking growth and tailored services have led to intense rivalry in this market [115]. Banking firms cannot reach their sustainable green goals without the help of their employees’ environmental concerns and awareness. Second, line managers’ verbal and nonverbal behaviors might influence consumers’ awareness of environmental issues since they frequently communicate with customers. Line managers are, therefore, a justifiable choice for the PCB samples of the current research. In this research, even though there isn’t a complete list of line managers, we employed the judgment sampling technique, a non-probability sampling design. Researchers use judgmental sampling as part of the non-probability sampling technique when they purposefully choose samples that meet predetermined criteria [116]. Based on the suggestions of [117], we selected the sample respondents who confirmed two criteria—(i) the line managers who have work experience in any PCB in Dhaka, and (ii) who have been with their current organization for a minimum of three years. With the assistance of each HR department, we had formal letters written to all 57 PCBs for the study’s goals. The letter featured an overview of the study’s goals, the demands of the respondents, the cover letter, and the questionnaire. Just 30 PCBs decided to take part in this study. We used the drop-off/pick-up (DOPU) approach to distribute and collect the questionnaires. The DOPU technique, supported by [115,118], may reduce the interviewers’ bias, and the respondents could answer questions at their own pace.

The data collection took place from May to October 2022. Each participating bank received 35 sets of questionnaires based on recommendations from the HR departments of the banks. A total of 1050 sets of questionnaires were allocated to the 30 PCBs. Out of 1050 questionnaires, we received 582, of which 540 were deemed fit for analysis. This resulted in a usable response rate of 51.42%, which is significantly higher than response rates from more recent studies such as [119] (29.06%). According to a summary of the demographic data of 540 respondents, over three-quarters of the 540 respondents in this survey, or 72.3%, were aged between 31 and 40 years. In the current research, most participants (71.6%) were male. More than one-third (40.8%) of the respondents had served between 6 and 10 years, while 83.6% of them had a master’s degree.

3.1. Survey Measures

For the purpose of assessing our exogenous, endogenous, and mediator variables, we modified 48 items from various widely used scales. All of the variable definitions and associated data sources utilized in this study are included in Appendix A. We used five dimensional stakeholder pressures from the recognized scale of [120]. We referred to [121] for 8 environmental and 4 social performance items, for 12 items in total. Finally, we developed eight items from [122] to measure green practice adoption. The items were declared acceptable based on an acceptability threshold of 0.7 because the scale validity for these dimensions ranged from 0.77 to 0.91 [123].

3.2. Data Analysis

SEM-PLS (Smart PLS-3.2.7 version) and SPSS statistical analysis tools (version 21) were used for data analysis and hypothesis testing. We use common method variation (CMV) since the questionnaires were collected all at once from identical types of respondents. The methods recommended by [124] were used to prevent CMV. For the measures of the constructs to emerge differently by several sets of directives in the questionnaires, proximal and methodological separation was adopted.

Furthermore, to provide statistical control, the severity of CMV was evaluated using Harman’s single-factor test. According to [124], CMV is unreliable if a single latent component is responsible for most of the variance explained. The findings showed that the first component explained 31.46% of the variance, which was much lower than 50%, indicating that CMV was not a prominent concern in the dataset.

4. Data Analysis and Results

4.1. Hierarchical Model of Stakeholders’ Pressure

To evaluate the higher-order latent constructs, we employ the repeated indicators approach, in which a second-order construct is directly evaluated by watching the indicators of all the first-order constructs [125]. The current study examines the correlations between all of the indicators of the five constructs in the first order, as advised by [126], to ascertain if the hierarchical construct (stakeholders’ pressure) is effectively portrayed as a reflecting construct. The current research determines if the hierarchical construct (stakeholders’ pressure) is effectively portrayed as a reflective construct by examining the correlations between all of the indicators of the five constructs in the first order, as recommended by [126]. The outcomes reveal that all first-order elements are interrelated and statistically significant at p < 0.01 (

Table 2. Hierarchical Stakeholders’ pressure.

(CR = 0.891, AVE = 0.621)
Customer Pressure	Competitors’ Pressure	Employee Pressure	Government Pressure	Senior Managers’ Pressure
R2 = 0.451	R2 = 0.639	R2 = 0.621	R2 = 0.745	R2 = 0.650
β = 0.672	β = 0.799	β = 0.788	β = 0.863	β = 0.806
p < 0.01	p < 0.01	p < 0.01	p < 0.01	p < 0.01

). The path coefficients from stakeholders’ pressure to its constructs in the first order are substantial at p < 0.001. The average variance extracted (AVE) and composite reliability (CR) of stakeholders’ pressure as second-order constructs are 0.893 and 0.628, respectively.

4.2. Measurement Model

We employed confirmatory factor analysis to investigate reliability, convergent, and discriminant validity. The factor loadings (FL) for indicators should be more than 0.708 to ensure satisfactory convergent validity. On the other hand, according to [123], the AVE and CR scores should be greater than 0.50 and 0.70, respectively. Based on the findings, it can be exhibited that all loading, AVE, and CR values were found to be higher than the recommended ones (

Table 3. Measurement Model.

Constructs	Items	FL	AVE	CR
Customer Pressure (CP)	CP1	0.771	0.565	0.892
	CP2	0.828
	CP3	0.727
	CP4	0.766
	CP5	0.803
	CP6	0.775
	CP7	0.683
	CP8	0.644
Competitors’ pressure	CoP1	0.769	0.702	0.859
	CoP2	0.829
	CoP3	0.889
	CoP4	0.859
Employee pressure	EP2	0.632	0.522	0.718
	EP3	0.81
	EP4	0.806
	EP6	0.62
Environmental performance	EnP1	0.790	0.639	0.920
	EnP2	0.864
	EnP3	0.816
	EnP4	0.794
	EnP5	0.839
	EnP6	0.804
	EnP7	0.767
	EnP8	0.710
Government pressure	GP1	0.686	0.524	0.849
	GP2	0.707
	GP3	0.649
	GP4	0.745
	GP5	0.772
	GP6	0.767
	GP7	0.732
Green Practice Adoption	GPA1	0.778	0.547	0.909
	GPA2	0.719
	GPA3	0.722
	GPA4	0.757
	GPA5	0.803
	GPA6	0.786
	GPA7	0.715
	GPA8	0.791
Senior Managers’ Pressure	SMP1	0.807	0.741	0.884
	SMP2	0.897
	SMP3	0.877
	SMP4	0.860
Social Performance	SP1	0.800	0.701	0.860
	SP2	0.855
	SP3	0.838
	SP4	0.856

). Here, the lowest AVE and CR were found to be 0.522 and 0.718 for employee pressure, respectively.

Both the heterotrait-monotrait (HTMT) ratio and the Fornell-Larcker formula were used to determine discriminant validity. The authors in [127] suggested two cutoff values for HTMT ≥ 0.90 (the model lenient criterion) or ≥0.85 (the stricter criterion). We used a cutoff value of 0.85 to establish discriminant validity, and all values were significantly below this tolerance threshold (

Table 4. Discriminant Validity (HTMT).

	CP	CoP	EP	EnP	GP	GPA	SMP	SP
CP
CoP	0.400
EP	0.619	0.679
EnP	0.458	0.716	0.728
GP	0.552	0.697	0.707	0.778
GPA	0.459	0.78	0.855	0.790	0.791
SMP	0.302	0.775	0.768	0.761	0.708	0.792
SP	0.357	0.681	0.684	0.839	0.658	0.719	0.729

). Additionally, according to the Fornell-Larcker criteria, all diagonal numbers should have greater correlations than the constructs of their comparable off-diagonal numbers [125]. The findings of the analysis also exhibited satisfactory discriminant validity based on the Fornell-Larcker method (

Table 5. Discriminant Validity (Fornell-Larcker).

	CP	CoP	EP	EnP	GP	GPA	SMP	SP
CP	0.752
CoP	0.360	0.838
EP	0.469	0.541	0.723
EnP	0.427	0.638	0.595	0.799
GP	0.492	0.595	0.598	0.689	0.724
GPA	0.423	0.686	0.694	0.826	0.699	0.758
SMP	0.282	0.674	0.627	0.687	0.615	0.711	0.861
SP	0.327	0.583	0.542	0.746	0.564	0.701	0.633	0.838

).

4.3. Structural Model

According to [123], to analyze the structural model, the coefficient of determination ($R^2$), the significance of the path coefficient b, the effect size ($f^2$), and cross-validated redundancy are all calculated ($Q^2$). Cohen [128] suggested the following intervals for describing $R^2$ values: 0.26 and above, substantial; 0.13–0.25, moderate; and 0.02–0.12, weak. A structural model was constructed in which second-order stakeholders’ pressure was deliberated as the exogenous variable affecting the organization’s environmental and social performance (

Table 6. Direct Hypotheses.

Hypotheses	Std. Beta	Std. Error	t-Value	p Values	f2	95% LL	95% UL	Decision
SHP > EnP	0.305	0.049	6.16	0	0.11	0.208	0.404	S
SHP > SP	0.297	0.065	4.58	0	0.063	0.175	0.422	S
SHP > GPA	0.210	0.018	11.67	0	1.934	0.77	0.841	S
GPA > EnP	0.578	0.05	11.57	0	0.398	0.475	0.669	S
GPA > SP	0.460	0.063	7.32	0	0.151	0.338	0.581	S

and Figure 2). The findings of the analysis exhibited that both environmental and social performance explained 71.3% and 52.2% of the variance by stakeholders’ pressure and GPA. On the other aspect, GPA is explained by a 65.9% variance by five-dimensional stakeholders’ pressure. Thus, all $R^2$ values of the current research were found to be substantial according to the recommendations of [128]. As displayed in Table 5, all direct paths of the recent research were significantly positive: stakeholders’ pressure to environmental (β 0.305, p < 0.01) and social performance (β 0.297, p < 0.01), and stakeholders’ pressure to GPA (β 0.210, p < 0.01). Again, the path from GPA to both environmental (β 0.578, p < 0.01) and social (β 0.460, p < 0.01) performance was also positive and significant. Thus, the result supported all direct hypotheses proposed in the current study (Table 6).

Another focus of the current research is to investigate the mediating influence of GPA between stakeholders’ pressure and environmental and social performance. The mediation effect was examined based on the guideline of [129], and the authors recommended that if the confidence interval does not intersect with 0, there is a considerable mediation effect. Depending on the findings of the analysis, both the mediating relationships were found to be significant and accepted, such as GPA between stakeholders’ pressure and environmental performance (β 0.470, p < 0.01) and GPA between stakeholders’ pressure and social performance (β 0.374, p < 0.01). Results of the mediation exhibited that both the mediation effects were considered to be partial mediation (

Table 7. Mediating Hypotheses.

Mediating Hypotheses	Std. Beta	Std. Error	t-Value	p Values	95% LL	95% UL	Decision
SHP > GPA > EnP	0.470	0.043	10.853	0	0.382	0.549	S
SHP > GPA > SP	0.374	0.053	7.068	0	0.27	0.479	S

). In addition, the model’s predictive relevance was calculated using a blindfolding approach at a distance of 7. If the $q^2$ value is greater than 0, the model has predictive power for a particular dependent variable [123]. The predictive relevance was accepted as indicated by $q^2$ values of 0.231 for GPA, 0.267 for environmental performance, and 0.312 for social performance, all of which were greater than 0.

5. Discussions and Conclusions

5.1. Discussions of the Research

This study employs ST to establish a conceptual framework that explores the relationships between issues that have not received enough attention in the past, such as SP, GPA, EP, and CSP. The empirical findings supported ST’s prediction that SP instilled a feeling of social responsibility in businesses and encouraged them to engage in social and environmental preservation initiatives. Our findings showed that SP significantly improved EP, supporting our initial hypothesis (H1). Additionally, these findings are consistent with other studies by [32] Alt et al. (2015), [130,131] in a broader context.

Also, according to stakeholder theory, businesses should implement environmental practices [132]. However, the degree of environmental sustainability and pressure groups are inversely correlated [133]. Therefore, businesses incorporate stakeholder pressure and demand by implementing environmental performance in order to achieve long-term sustainability, as stakeholders’ demands for environmental practices are continually increasing. In addition, these findings support the notion that SP is crucial in guiding the banking sector’s adoption of various environmental strategies and CSR initiatives for environmental protection. Organizations that prioritize their stakeholders reap long-term advantages for sustainable development. Our findings also show that SP has a favorable influence on CSP procedures, supporting our second hypothesis (H2). These findings support those made in [92], where a favorable correlation between SP and CSP was found. Furthermore, our analysis largely corroborated the findings in [40], which showed that primary stakeholders have a favorable relationship with CSR, while secondary stakeholders have little bearing on it. Being socially responsible would increase goodwill, competitive edge, customer loyalty, and positively impact corporate performance.

However, some stakeholder groups—such as unions—that have a significant interest in labor rights may not be interested in other CSR-related concerns, such as reducing pollution [134]. In order to achieve corporate social performance (CSP), there must be high levels of consistency at every organizational level. In order to create plans that satisfy the CSR requirements of stakeholders, businesses also need a certain set of skills and resources [35]. Although some of the costs that businesses must pay for CSR in order to achieve CSP may have a short-term negative impact on their performance, by gratifying a variety of stakeholders, businesses become competitive, reputable, and a long-term source of money.

Our data show that SP has a big impact on GPA. The identification of the strong positive impact of SP on GPA matches with the studies of [22,27,120]. These findings support the notion that SP is crucial in directing the banking sector to adopt various environmentally friendly practices. Additionally, Refs. [135,136] found that stakeholders put pressure on green innovation since it is moving quickly to gather and apply green information that might be a vital tactical ally in the fight for ecological protection.

Further, the adoption of H4a and H4b emphasizes the significance of adopting GP for EP and CSP, supporting the earlier findings in a wider perspective [109,137,138]. The finding emphasizes how GPA, by bringing together a variety of stakeholders, is essential to establishing social responsibility and EP in a developing country. Moreover, on examining the indirect relationship among SP, EP, and CSP through GPA, the results revealed that GPA mediates the relationships of SP to EP and SP to CSP, which supports the sixth (H5a) and seventh (H5b) hypotheses. The decisive and contemplative role of GPA on EP and CSP highlighted that GPA offers chances for enterprises to collaborate and disseminate green knowledge across various stakeholders. These chances aid in utilizing their abilities and experiences in practical tasks for the creation of environmentally friendly procedures and goods through social welfare.

5.2. Theoretical Implications

The current study makes numerous contributions to contemporary literature. The study used stakeholder theory to examine the impact of stakeholder pressures on the adoption of green procurement, reducing resource consumption, using renewable energy, and green training, and how these collectively influenced organizational, social, and environmental performance. This may help researchers better understand the antecedents of the motivation for adopting green practices. In describing the theoretical implications, this study divulged that in complying with the stakeholders’ demands, green practices focused on stakeholder theory have been adopted by various business firms to improve their social and environmental performance. In order to bridge the gaps in the existing research, a pressure-practice framework built on ST was first validated. In the context of developing countries such as Bangladesh, the proposed study model shows how different stakeholders are involved in organizational activities to achieve their sustainability goals through SEM.

Second, the direct effects of SP on EP, CSP, and GPA were discovered by this study, which shed light on a peculiar phenomenon that had not been researched previously. Although earlier research had noted the impact of SP on CSR [46], our findings demonstrate that firms are empowered to promote the critical roles of EP and CSP when stakeholders are committed to sustainable goals, significantly expanding the body of knowledge.

Third, this study examined the direct effects of GPA on EP and CSP, but it also investigated how GPA among SP affected EP and CSP indirectly. The proposed connections have provided a novel perspective. Previous research studies revealed that additional investigation is necessary to fully comprehend the function of GPA between the SP and other targeted constructs [108]. Therefore, the current study established the complementary mediation of GPA and supported its mediating role. The results suggest that enterprises should efficiently integrate GPA into all operational tasks to achieve greater performance.

5.3. Practical Implications

This study makes many valuable contributions. The outcomes demonstrate the necessity of institutionalizing SP in the banking industry in order to get superior performance results. SP is a composite group of many pressures from various sources, which can influence the implementation of EP and CSP policies. Because other stakeholders, including the government and the media, are continually scrutinizing their conduct, it is advisable for stakeholders to compel an organization to promote social and environmental welfare through environmental conservation. In the short term, top management and shareholders viewed EP and CSP as an additional financial burden. They must determine how market leadership and increased corporate value are examples of the long-term advantages of EP and CSP. The current study highlighted that to offer green products that meet customer expectations and create greater commercial chances, firms must employ cutting-edge production techniques and processes. Additionally, unpredictable environmental changes may be avoided with the active involvement of numerous stakeholders.

For instance, to lessen the negative consequences of environmental deterioration, the Bangladeshi government is aiming to promote ecologically friendly and sustainable activities [75]. However, the government should offer tax breaks and incentives for the moderate use of natural and energy resources in light of the current energy crisis and resource constraints.

Additionally, this study offers professionals advice on how to pursue advantages such as increased productivity and the ability to adapt to unanticipated changes; firms should be able to learn, assimilate, and integrate green knowledge into organizational operations. Previously, GPA used to be undervalued by organizations when it came to long-term objectives. The results of [109] showed that the function of green finance in enhancing EP and CSP is more crucial to boosting organizational sustainability. Thus, it is advised that senior managers and decision-makers make extra efforts to adopt green practices to improve EP and environmental-related CSP. Additionally, the findings of this study are useful for creating training and educational materials for industries.

Moreover, from a practical standpoint, even though environmental protection largely depends on organizations, stakeholders such as governments, consumers, sustainable investors, and policymakers, among other industry players, can assist firms in this regard by formulating policies that will promote green manufacturing practices and green technological investments. Government agencies and policymakers may work with and support green investments made by companies that adhere to pressure from stakeholders and pursue green manufacturing practices. Stakeholders’ actions will encourage green practices that improve social and environmental performance. Additionally, policymakers and industry leaders may work together to combine stakeholders’ pressure and market forces to encourage companies’ commitment to social and environmental performance.

6. Limitations and Future Research Directions

This study identifies a few topics that will need more research. Due to limited time and resources, a cross-sectional technique was used in this study. However, a longitudinal strategy would have led to better outcomes and a more reliable conclusion. This study was limited to Bangladesh’s banking industry. In the future, the researcher could broaden the study’s focus beyond Bangladesh, which may produce a more accurate conclusion. The results obtained in other nations could be compared with those of this study. Also, given the intersection of numerous cultural, social, ethical, environmental, and political issues, one cannot overlook the opportunity it represents; the outcomes may vary in other domains. Finally, to increase the generalizability of this model, it can also be tried in another business industry.

Finally, this study has produced a wide range of findings that represent important additions to the corpus of knowledge. The involvement of stakeholders in an organization’s environmental strategy in regard to green technology may put pressure on the adoption of better communal and green practices for sustainable outcomes. We developed the framework for this study based on the ST and existing literature, and we used SEM to test the hypotheses. This study investigated how SP, EP, CSP, and GPA directly relate to one another. A significant contribution was made by shedding light on the GPA’s mediating function in these relationships. The findings support the idea that SP significantly contributes to achieving EP and CSP goals directly and via GPA. These results show that organizational pressure from many stakeholders helps them to achieve organizational excellence and sustainable development goals.