Linking Sustainability and Brand Love Through Employees’ Insights on ESG Practices in the Airline Industry

Abstract

This study investigates the intricate mechanisms linking ESG practices, innovation performance, and brand outcomes from the perspective of internal stakeholders—employees. This study investigates employees’ perceptions of ESG practices and their influence on brand identification and brand love, based on a quantitative survey conducted among 346 employees from three major Taiwanese airlines; the findings reveal that ESG practices positively influence innovation performance, which, in turn, significantly enhances brand loyalty and brand value, ultimately fostering greater brand love. Moreover, the results indicate that an innovative organizational climate exerts a significant positive moderating effect on the relationship between ESG practices and innovation performance. In contrast, the moderating effect of human capital was not found to be significant.

1. Introduction

With the rise of global sustainability trends, investors and other stakeholders have increasingly focused on corporate performance across environmental, social, and governance (ESG) dimensions [1]. In response, firms are placing greater emphasis on ESG management to enhance their sustainability [2]. As corporate demands for sustainable development and corporate social responsibility (CSR) intensify, the ability to implement ESG initiatives—covering environmental, social, and governance aspects—has become a critical component of firm competitiveness. Environmental and social performance, combined with CSR-based governance approaches, form the core pillars of ESG and contribute to long-term corporate sustainability [3]. Firms across industries increasingly recognize that effective ESG practices can enhance corporate value [4] and mitigate risks [5]. ESG has thus evolved from a mere investment consideration to a central element of corporate sustainability strategy, extending to brand management and consumer decision-making [6]. ESG, as a core aspect of non-financial performance, is a vital driver of sustainable corporate operations and a cornerstone for future economic and social development [1].

When ESG activities effectively address the needs of stakeholders critical to a firm’s core operations, they can generate significant returns [7]. Achieving excellence in ESG implementation not only enhances brand image but also strengthens competitive advantage [8]. Innovation, widely regarded as a key component of competitiveness, should be embedded into organizational structures, processes, products, and services [9], serving as a mechanism to adapt to rapidly changing market environments. Beyond consumers, employees constitute a critical internal stakeholder group and their alignment with corporate sustainability efforts is increasingly vital for maintaining competitive advantage. While prior studies have primarily focused on ESG’s impact on firm value, stock performance, or financial outcomes [10,11], employee attitudes and behaviors are equally important, as workforce turnover can negatively affect both service and product quality, ultimately reducing customer satisfaction [12].

The relationship between sustainability initiatives and employee outcomes has become a burgeoning research area. CSR not only supports organizational sustainability but also fosters employees’ growth and work thriving, with positive perceptions of CSR strengthening commitment and enhancing engagement and performance [13]. This effect is often more pronounced among employees with higher trait gratitude. Moreover, CSR activities, especially those addressing environmental issues, enhance employee engagement and support sustainable organizational practices [14]. The impact of CSR, however, varies across employee groups: white-collar employees tend to respond more to external CSR initiatives, while blue-collar employees often value internal measures such as financial support, highlighting CSR’s critical role in fostering workforce sustainability [14]. Importantly, emotionally intelligent employees can leverage a firm’s brand image and CSR initiatives to strengthen commitment to work and organizational goals, which in turn improves service quality, promotes positive work outcomes, and enhances corporate reputation, performance, and sustainable competitiveness [15]. Within this context, human resources and an organizational climate that fosters innovation serve as internal capabilities that enhance innovation performance, ultimately influencing brand value, customer loyalty, and brand affection.

Given its high resource consumption and public visibility, the aviation industry has been proactive in improving sustainability ratings and publicly promoting ESG initiatives [3]. Airlines’ ESG strategies must not only focus on financial performance but also emphasize contributions to economic, social, and environmental spheres [16,17]. Notably, as travelers become more environmentally conscious, airlines’ ESG practices influence not only consumer behavior and perception but also the corporate brand image and like ability [18]. Consumer brand engagement positively impacts brand love, which in turn enhances brand evaluation, behavioral commitment, brand affection, and brand equity [19,20,21].

In the highly competitive service industry, particularly in aviation, enhancing brand value is essential for attracting new customers, retaining existing ones, and increasing market share and profitability. When travelers associate a company’s corporate image with positive values, this image becomes a significant source of brand value [22]. According to De Chernatony (2001) [23] the foundation for achieving brand differentiation is brand value, which is based on an organization’s core values [24] and reflects what the brand stands for. Building a strong and sustainable brand is thus crucial for major industries to navigate market challenges and ensure long-term development. Employees play a pivotal role in this process: as the first point of contact for a company’s brand, influence service quality, corporate image and customer loyalty [12].

Despite growing attention, a gap remains in empirical research on how the synergy between ESG practices and internal organizational innovation mechanisms particularly from the employee perspective affects employees’ brand identification and loyalty. Achieving excellence in ESG performance, both brand image and competitive advantage. To maintain sustainable growth, airlines must ensure that their operating models, strategies, products, and services are aligned with evolving societal values. Accordingly, this research employs an employee-based empirical investigation within the airline industry to examine whether effective ESG practices enhance employee brand loyalty through innovation performance. It further explores the moderating effects of innovative organizational climate and human capital on this relationship.

2. Literature Review and Hypothesis Development

2.1. Relationships Between ESG, Innovation Performance and Brand Dimensions

ESG encompasses non-financial practices related to environmental protection, social responsibility, and corporate governance [25,26], aiming to reduce risks, promote sustainability, and generate positive social impact [5,27]. With its increasing importance, non-financial performance now considered a critical metric for assessing corporate sustainability alongside financial performance [2]. ESG reporting and disclosure can enhance overall firm performance by attracting revenue and supporting more efficient managerial decision-making [28]. Firms with strong marketing capabilities tend to engage more in ESG activities, achieve higher ESG scores, and reduce investment inefficiency, particularly driven by environmental and social dimensions [29]. In the airline industry, ESG is especially crucial due to its significant environmental impact and the regulatory pressures implement green management practices [30]. Although ESG investments may involve initial costs [31], they can drive technological and process innovations through resource integration and reputation enhancement, ultimately increasing market value for high-performing firms [11,32]. High ESG performance in aviation and related industries is positively associated with innovation input and enables firms to proactively address environmental and social risk [9,33,34,35,36]. Accordingly, integrating ESG into core strategies alongside innovation is essential to maintain competitive advantage and prevent imitation [37]. Firms leading in environmental and social initiatives can co-create with stakeholders, drive green innovation, strengthen market competitiveness, and shape a green brand identity [38,39]. Employees play a critical role in translating these sustainability initiatives into organizational outcomes, fostering brand love and supporting integrated reporting practices [28]. For example, the financial sector demonstrates its key role in sustainable transformation through innovative instruments such as green bonds and green funds [40], whereas the hospitality and tourism industry leverages ESG practices to reduce operational risks and accelerate the development of new products and processes [41,42]. Taken together, moderate ESG practices—including environmental investment, social responsibility, and sound governance—enhance corporate reputation, attract investors and consumers, and foster business model innovation [43]. Based on this discussion, Hypothesis 1 is proposed.

Hypothesis 1.

ESG practice has a positive effect on innovation performance.

Innovation is a firm’s ability to transform new knowledge and technologies into usable products, services, or processes [44,45]. It is crucial for achieving competitive advantage long-term development [46,47]. Active innovation enhances service quality and customer satisfaction, thereby building trust and loyalty [9,48]. CSR further enhances airlines performance [49], as firms proactively address environmental expectations through eco-friendly technologies and products, regulatory compliance and the reduced environmental impact [50].

CSR has a positive impact on passengers’ purchasing behavior and decisions, providing a competitive advantage for airlines [30]. Research indicates that the launch of new products and experiences significantly strengthens customers’ intention to repurchase and their word-of-mouth recommendations [19,22]. Sustainability initiatives also strengthen brand value by promoting responsible practices, enhancing reputation, and supporting long-term growth, particularly in markets with established brands and high R&D investment, underscoring the strategic role of sustainability in brand development [51]. Brand loyalty reflects consumers’ internal attachment to a brand. Service and product innovations can enhance quality and customer satisfaction, thereby increasing customer retention and repurchase intentions [52]. Innovation performance not only strengthens brand differentiation but also improves brand awareness and the ability to command premium pricing [53,54]. Numerous studies indicate that firms with high innovation performance exhibit superior brand equity and market share compared to their competitors [55,56]. Brand value thus represents a firm’s tangible and externally observable capability. Therefore, Hypothesis 2&3 are proposed as below.

Hypothesis 2.

Innovation Performance has a positive effect on Brand Loyalty.

Hypothesis 3.

Innovation Performance has a positive effect on Brand Value.

Brand loyalty is defined as the consumer’s psychological and behavioral tendency to repeatedly purchase or consistently prefer the same brand [57,58]. When consumers show high brand loyalty, their emotional connection deepens, leading to a strong emotional attachment known as “brand love” [1,19]. Airlines products are consumed outside the customer’s residential area and cannot escape various environmental/ecological issues [50]. Corporate sustainability actions in which airlines assume social and environmental responsibilities are rapidly becoming key aspects of a company’s successful operations and marketing strategies in the airline market [35,59]. Transparent sustainability communication is considered both an ethical responsibility and an important consumer management strategy, helping to foster consumer loyalty and brand trust [60].

Research shows that loyal customers are more likely to proactively endorse a brand through social media and word of mouth, and to support the brand’s long-term development [21]. Brand value is defined as the sum of consumers’ differentiated responses and subjective evaluations of a brand [61,62]. Brand value includes functional, symbolic, and experiential value [61]. When these values are highly recognized by customers, the emotional connection deepens, leading to brand love [63,64]. In other words, when a brand can provide superior quality and symbolic meaning, consumers develop a more profound emotional identification with the brand, which evolves into brand love [63,65]. Firms with stronger brand equity can achieve a stronger emotional connection, which is inextricably linked to customer trust [66], thereby enhancing customer word-of-mouth influence and loyalty [19,67].

Hypothesis 4.

Brand Loyalty has a positive effect on Brand Love.

Hypothesis 5.

Brand Value has a positive effect on Brand Love.

2.2. The Moderating Roles of Innovative Organizational Climate and Human Capital

In highly competitive market environments, airlines increasingly emphasize corporate social responsibility and environmental initiatives, positioning ESG practices as essential tools for attracting and retaining customers, enhancing brand reputation, and supporting marketing strategies [50]. Firms that demonstrate exceptional ESG performance and achieve notable sustainability outcomes typically gain a significant competitive advantage. This competitive advantage extends to internal operations: Sustainable employer branding, which emphasizes transparency, ethics, and inclusivity, enhances employee engagement and safety voice behavior. Aligning organizational values with intrinsic motivations fosters internal communication, trust, and long-term resilience, reflecting the strategic role of sustainability in internal stakeholder management [68]. Accordingly, understanding how firms integrate, generate, transfer, and utilize intellectual capital provides stakeholders with long-term insights into corporate development [37]. Research further indicates that ESG initiatives positively influence corporate performance, with firms in the Asia–Pacific region leveraging ESG practices to enhance competitive advantage, strengthen stakeholder trust, and support long-term sustainability [2]. In the value creation process, integrating individual expertise with manufacturing and learning-driven innovation, alongside hierarchical and social innovation strategies, enables more rigorous organizational operations [69]. This integration effectively transforms external resources into internal capabilities, thereby preserving and enhancing organizational value [70]. However, top management governance structures exert a significant impact on ESG performance, and the effectiveness of different governance mechanisms varies [71]. Knowledge networks play a critical role in facilitating corporate innovation [41]. Interdepartmental or employee networks support information exchange and the dissemination of creative ideas, enabling firms to convert employee creativity into tangible performance outcomes [72]. Through “latent connections” among internal departments or employees, firms can explore innovative approaches to improve service quality and operational efficiency [73], thereby enhancing capability development. An organizational innovation climate further allows employees’ creative ideas to be internalized as organizational knowledge, encompassing attitudes toward authority and responsibility as well as understanding of core organizational culture. Such a climate represents a critical asset for fostering organizational creativity and sustaining innovation [74].

An innovation organizational climate can help convert employees’ creativity into organizational knowledge. The innovation organizational climate is the sum of all assets that enable an organization’s creativity, such as employees’ attitudes toward power and responsibility and their awareness of the organization’s core culture [74]. By combining prior organizational culture with new concepts to develop employees’ innovative capabilities, firms can facilitate the brainstorming of new ideas and processes [75], which can further lead to desirable innovation outcomes. In addition, extensive empirical research suggests that an innovation organizational climate may help translate employees’ creativity into organizational knowledge [76,77]. Innovation is a major determinant of corporate sustainability and competitiveness [78,79,80]. In a competitive business ecosystem, firms must formulate diverse strategies based on their resources and capabilities to enhance their innovation, sustainability, and business performance outcomes [78,79,80]. Orfila-Sintes & Mattsson (2009) [81] point out that innovative behavior can cultivate an organization’s ability to absorb new information and a knowledge-sharing culture. By applying new ideas in practice, it promotes the continuous accumulation of human capital, accelerates the capture of market opportunities, and leads to better performance [82]. Moreover, through the establishment of interaction and mutual trust, firms can create more possibilities for applying new concepts in practice and promote inter-organizational and inter-departmental collaboration [83].

Hypothesis 6.

Innovative organizational climate moderates the relationship between ESG practice and innovation performance.

A firm’s human capital represents the intellectual power and innovative capacity of its employees, which determines its future growth [84]. It is an intangible organizational asset, often correlated with performance [85]. Under the synergistic effect of human capital and innovative organizational climate, firms can quickly adapt to market changes, meet customer demands, and sustain long-term profitability and value creation in a highly competitive environment [85,86]. The accumulation of human capital is a process that requires not only appropriate training and education but also significant resource investment and incentive mechanisms to cultivate organizational innovation capabilities [87]. Human capital can help organizations gain a competitive advantage [88,89,90]. In other words, the knowledge and skills embedded in human capital can provide a differentiating advantage for a firm. According to studies by Hamadamin & Atan (2019) [88], Kryscynski et al. (2021) [89], and Minbaeva (2018) [90], firms with high levels of human capital are more likely to strengthen their market position through product and process innovation [91]. The skills and knowledge possessed by employees can solve problems that arise within the company [92]. Furthermore, human capital is a source that accelerates innovation and creativity. It helps to brainstorm new ideas and processes [93]. Firms with good innovative behavior can keenly perceive changes in the external environment and quickly internalize new knowledge through internal learning mechanisms to stimulate innovative actions, thereby reducing uncertainty and gaining a significant competitive advantage [94]. Based on the literature reviewed above, we hypothesize as follows:

Hypothesis 7.

Human capital has a moderating effect on the relationship between ESG practice and innovation performance.

3. Methods

3.1. Sample and Procedure

This study surveyed in-service flight and ground crew members from three major airlines in Taiwan to accurately reflect the current situation and operational mechanisms between sustainable innovation transformation and brand strategy in the airline industry. The questionnaire was administered anonymously and online. Participation was voluntary and confidential to ensure data integrity. Relevant information about the study was provided to all participants. The data were collected from September to December 2024. The study was conducted in accordance with the ethical guidelines of the Declaration of Helsinki [95].

3.2. Measurement of Scales

This study employed a seven-point Likert scale to measure seven key dimensions: ESG practice, Innovation Performance, Brand Loyalty, Brand Value, Brand Love, Innovative Organizational Climate, and Human Capital. The ESG practice scale was adapted from Kim and Hwang (2023) [18]. Innovation Performance was assessed using the scale developed by Lim (2021) [96]. The constructs of Brand Loyalty and Brand Love were measured based on the scales proposed by Puriwat and Tripopsakul (2023) [97]. The Brand Value dimension adopted items from Muhonen et al. (2017) [98]. Innovative Organizational Climate was evaluated using the scale by Minh Hieu (2023) [99], and Human Capital was measured with reference to Liu (2017) [85] (Appendix A). All scales demonstrated strong internal consistency, with Cronbach’s α values exceeding 0.70, indicating good reliability and validity of the questionnaire.

3.3. Data Analysis

This study employs Partial Least Squares–Structural Equation Modeling (PLS-SEM) to test the proposed hypotheses, as it is a widely used tool for developing new models [97]. Furthermore, the questionnaire for this study was measured using a seven-point Likert scale to examine the current state and operational mechanisms between sustainable innovation transformation and brand strategy and to verify the causal relationships among them.

The model validation process of this study references standards proposed by several scholars. For path analysis, a two-tailed test was used to determine the critical t-value. For collinearity diagnostics, a VIF value of less than 5 indicates the absence of multicollinearity issues among variables. In terms of discriminant validity, the HTMT value should be below 0.95 to be considered acceptable. According to recommended standards, an R² value of 0.67 represents a high level of explanatory power, while 0.33 indicates moderate explanatory power [100,101,102,103,104,105,106]. It is also recommended to test for moderating effects by examining the interaction of all path coefficients and their corresponding p-values [107,108]. The structure and hypotheses of this study are shown in Figure 1.

4. Results

4.1. Demographic Analysis

Based on a literature review, this study conducts an empirical investigation into the current state of sustainable innovation transformation and brand strategy within the airline industry. The research focuses on five core variables: ESG practice, Innovation Performance, Brand Loyalty, Brand Value, and Brand Love. Innovative Organizational Climate and Human Capital are also included as moderating variables to verify their mechanisms of action in the relationship between ESG practices, innovation, and brand strategy.

The questionnaire was revised based on scales from relevant literature. To ensure the semantic clarity and accuracy of the cross-language translation, the research team invited two scholars with extensive experience in airline research to review the translation and assess its content validity.

Data were collected via an online survey conducted from September to December 2024. The target population consisted of flight and ground crew members from major airlines in Taiwan. A total of 421 questionnaires were collected. After excluding incomplete or inconsistent responses, a final sample of 346 valid questionnaires was obtained, resulting in an effective response rate of 82%. The demographic information and distribution of the surveyed sample are detailed in

Table 1. Analysis of demographic background variables.

Background Variables	Category	Total	Percentage (%)
Sex	Male	94	27.2
	Female	252	72.8
Age	21~30	50	14.5
	31~40	160	46.1
	41~50	84	24.3
	51~60	50	14.5
	61 up	2	0.6
Education	College diploma/undergraduate	257	74.3
	Postgraduate	89	25.7
Service type	Air duty	196	56.6
	Ground service	150	43.4
Job title	Flight Attendant	147	42.5
	Chief Flight Attendant	24	6.9
	Cabin Manager	19	5.5
	Ground Staff Supervisor	23	6.6
	Ground Staff	113	32.7
	Other	20	5.8
seniority	Under 5 years	23	6.6
	5–10 years	63	18.2
	11~15 years	128	37.0
	16~20 years	28	8.1
	21~25 years	54	15.6
	over 25 years	50	14.5

n = 346.

.

4.2. Evaluation of the Measurement Model

This study employed Smart-PLS 4.0 software to analyze the research model. The evaluation of the measurement model was conducted based on the guidelines proposed by [103,104]. The resulting values for the model evaluation are as follows.

The measurement model results are presented in

Table 2. Confirmatory factor analysis results for the measurement scale.

Item	Variables	Factor Loadings	Cronbach’s α	Composite Reliability	AVE
ESG practice	ER1	0.867	0.970	0.973	0.752
	ER2	0.820
	ER3	0.888
	ER4	0.918
	ER5	0.881
	ER6	0.895
	SR7	0.789
	SR8	0.899
	SR9	0.894
	GR11	0.864
	GR12	0.837
	GR13	0.845
Innovation performance	PI14	0.898	0.985	0.987	0.821
	PI15	0.897
	PI16	0.902
	PI17	0.911
	PI18	0.915
	PrI19	0.916
	PrI20	0.933
	PrI21	0.949
	PrI22	0.954
	PrI23	0.902
	PrI24	0.911
	AI25	0.896
	AI26	0.842
	AI27	0.907
	AI28	0.903
	AI29	0.851
Brand values	BV38	0.957	0.964	0.977	0.933
	BV39	0.974
	BV40	0.966
Brand loyalty	BL45	0.950	0.977	0.983	0.934
	BL46	0.981
	BL47	0.975
	BL48	0.960
Brand love	BO41	0.934	0.970	0.978	0.918
	BO42	0.967
	BO43	0.969
	BO44	0.962
Innovative Organizational Climate	OC30	0.945	0.979	0.982	0.870
	OC31	0.938
	OC32	0.937
	OC33	0.951
	OC34	0.933
	OC35	0.922
	OC36	0.950
	OC37	0.886
Human Capital	HC49	0.929	0.973	0.978	0.880
	HC50	0.951
	HC51	0.949
	HC52	0.926
	HC53	0.949
	HC54	0.922

. The factor loadings of all indicators ranged from 0.789 to 0.981, all exceeding the recommended threshold of 0.70, indicating satisfactory indicator reliability. The Cronbach’s α values ranged from 0.964 to 0.985, demonstrating high internal consistency and strong reliability. CR values ranged from 0.977 to 0.987, further confirming the model’s internal consistency. The AVE values ranged from 0.821 to 0.933, all above the recommended threshold of 0.50, suggesting that the model exhibits good convergent validity [100,101,102,103,104,105,106].

Furthermore,

Table 3. Discriminant Validity Assessment Using the Fornell–Larcker Criterion.

	BL	BO	BV	ESG	HC	IP	OC
Brand loyalty	0.967
Brand love	0.858	0.958
Brand values	0.859	0.909	0.966
ESG practice	0.800	0.844	0.813	0.867
Human Capital	0.869	0.868	0.858	0.857	0.938
Innovation performance	0.770	0.834	0.850	0.899	0.863	0.906
Innovative Organizational Climate	0.731	0.814	0.821	0.832	0.824	0.899	0.933

presents the results of the Fornell–Larcker criterion, which was used to assess discriminant validity. The square root of the AVE for each construct was greater than its correlations with other constructs, indicating satisfactory discriminant validity [102].

Table 4. Intercorrelations of the HTMT variables.

	BL	BO	BV	ESG	IP
Brand loyalty
Brand love	0.881
Brand values	0.885	0.939
ESG practice	0.821	0.868	0.838
Innovation performance	0.784	0.853	0.872	0.917

shows that all HTMT values among the constructs are below the threshold of 0.95, indicating acceptable discriminant validity [105]. Therefore, the measurement model in this study demonstrates good reliability and validity, allowing for subsequent verification through SEM.

4.3. Structural Model Analysis

The hypotheses were tested using PLS-SEM, with the results presented in

Table 5. Path analysis and test.

Hypothesis	Path	β	t	R2	f2	VIF	95% CI LL	95% CI UL	Results
H1	ESG→IP	0.362	68.846 ***	0.809	4.243	1.000	0.870	0.922	supported
H2	IP→BL	0.770	24.810 ***	0.593	1.460	1.000	0.703	0.826	supported
H3	IP→BV	0.850	43.342 ***	0.723	2.608	1.000	0.807	0.885	supported
H4	BL→BO	0.296	5.046 ***	0.850	0.153	3.803	0.186	0.414	supported
H5	BV→BO	0.655	11.302 ***	0.850	0.751	3.803	0.535	0.760	supported

Note: *** p < 0.001; ESG: Environmental, Social, and Corporate Governance; IP: Innovation performance; BL: Brand loyalty; BV: Brand Values; BO: Brand love.

. VIF values for all constructs in the structural model ranged from 1.000 to 3.803, all below the threshold of 5, indicating no multicollinearity among the constructs and no adverse effect on the estimation of path coefficients. The R² values of the endogenous constructs ranged from 0.593 to 0.850, suggesting moderate to high explanatory power.

The results revealed that ESG practice significantly influenced Innovation Performance (β = 0.362, p < 0.001, [0.870, 0.922]); Innovation Performance significantly influenced Brand Loyalty (β = 0.770, p < 0.001, [0.703, 0.826]) and Brand Value (β = 0.850, p < 0.001, [0.807, 0.885]); Brand Loyalty significantly influenced Brand Love (β = 0.296, p < 0.001, [0.186, 0.414]); and Brand Value also significantly influenced Brand Love (β = 0.655, p < 0.001, [0.535, 0.760]). Therefore, all five hypotheses (H1 to H5) were supported, as illustrated in Figure 2.

4.4. Examination and Analysis of the Moderating Effect

In the moderation analysis results (

Table 6. Test for Moderating Effects Interference Effect Evaluation Form.

Hypothesis	Path	β	t	Results
H6	ESG*OC → IP	−0.038	1.981 *	supported
H7	ESG*HC → IP	0.006	0.372	not supported

Note: * p  <  0.05; ESG: Environmental, Social, and Corporate Governance; IP: Innovation performance; HC: Human Capital; OC: Innovative Organizational Climate.

), we examined the interaction effects of ESG practice with innovative Organizational Climate (OC) and Human Capital (HC) on Innovation Performance. First, H6 investigated whether innovative Organizational Climate moderates the relationship between ESG practice and Innovation Performance. The results show that the interaction term (ESG × OC) had a path coefficient of −0.038 with a t-value of 1.981, which was statistically significant (p < 0.05). This indicates that innovative Organizational Climate has a significant, but negative, moderating effect on the relationship between ESG practice and Innovation Performance. Second, H7 explored whether Human Capital moderates the relationship between ESG practice and Innovation Performance. The results show that the interaction term (ESG × HC) had a path coefficient of β = 0.006 with a t-value of 0.372, which was not statistically significant (p > 0.05). This indicates that Human Capital does not have a significant moderating effect on the relationship, and thus, H7 was not supported.

5. Discussion

Previous research on ESG has predominantly emphasized financial performance and investor returns. This study, however, shifts the focus to internal stakeholders, specifically employees, and examines the underlying mechanisms linking corporate ESG practices, innovation performance, brand loyalty and value, and brand love. Utilizing a sample of 346 employees from the Taiwanese airline industry, the study empirically validates these relationships and further investigates the moderating roles of human capital and innovative organizational climate.

The results demonstrate that ESG practice positively influences innovation performance, which in turn strengthens employee-related brand loyalty, brand value, and brand love. Furthermore, recent studies indicate that corporate social responsibility has a significant effect on passenger loyalty [30] and is equally important in cultivating passenger affection for airline brands [18]. This study extends these findings by showing that from the employees’ perspective, airlines’ ESG and innovation performance similarly influence brand value, loyalty, and love. This finding aligns with the growing body of literature highlighting that ESG reporting and disclosure can enhance financial and overall performance by attracting revenues and supporting more efficient managerial decision-making [28], emphasizing the broad impact of sustainability on organizational outcomes.

In addition, this study’s analysis reveals that innovative organizational climate has a positive moderating effect on the relationship between ESG practice and innovation performance. This suggests that internal resources can amplify the impact of sustainability efforts on organizational benefits. An innovative organizational climate can facilitate knowledge flow and employee engagement within the organization, thereby enhancing the impact of ESG practices on innovation performance [99]. Although ESG practices generally promote innovation, their positive effects may diminish within highly mature innovation climates. This attenuation may stem from diminishing marginal returns—where employees perceive ESG activities as repetitive or disconnected from core innovation goals—as well as goal conflicts between ESG’s emphasis on compliance and innovation’s orientation toward risk-taking. Procedural constraints associated with ESG may also reduce innovation-related flexibility [109], while resource competition and greenwashing can divert investments away from substantive innovation efforts, weakening overall performance [110]. Consequently, this study identifies a negative moderating role of an innovative organizational climate in the ESG–innovation relationship and suggests that longitudinal research is needed to examine ESG’s influence over time. This finding aligns with existing research that views innovative organizational climate as an intangible asset, which is generally positively correlated with organizational performance [85] and can effectively transform external resources into internal developmental capabilities to maintain and enhance organizational value [70].

Finally, previous research has shown that the knowledge and skills embedded within human capital not only create a differentiating advantage and strengthen market position but also help solve organizational problems and serve as a core source of innovation for new ideas and processes [88,91,93]. However, the empirical results of this study show that human capital does not have a significant moderating effect on the relationship between ESG practice and innovation performance. This may reflect that human capital primarily has a direct influence on innovation capability rather than strengthening the link between ESG practice and innovation. In other words, even if an enterprise possesses a high level of human capital, its innovation performance may not be significantly enhanced by ESG practice if there is a lack of institutional design and resource allocation that integrates with ESG practices. This viewpoint is consistent with some studies that emphasize that the accumulation of human capital is a continuous process requiring appropriate training, education, resource investment, and incentive mechanisms to cultivate organizational innovation capability [87] and requires effective organizational management and strategic integration to be transformed into sustainable innovative outcomes [89,90]. We suggest that the moderating influence of human capital may only exert a stronger effect when complemented by sustainability-oriented training programs, leadership development, and higher levels of employee engagement. Furthermore, future studies should explore the interaction between human capital and leadership style or resource allocation to provide a more nuanced understanding of these mechanisms.

6. Implications

6.1. Theoretical Implications

The theoretical contributions of this study are as follows. First, most prior empirical research on ESG has predominantly focused on financial performance or investor returns, with a relative scarcity of studies from the perspective of internal stakeholders, particularly employees. By collecting a sample of 346 employees from the Taiwanese airline industry, this study verifies the impact of ESG practice on employee-related brand behaviors. This addresses a gap in the existing literature by exploring the mechanisms of ESG from an internal perspective, offering a new viewpoint for airline companies to cope with dual environmental and market pressures. This aligns with the work of Chen, Song, and Gao (2023) [111], who emphasized the crucial role of ESG in internal performance within large and high-risk environments. This internal focus further supports the argument that prior studies, which identified employees as a key theme in sustainability reports linked to ESG and innovation [28], should be empirically validated from the employee’s perception, which this study successfully accomplishes.

Second, this study introduces innovation performance into the mediation model between ESG practice and brand behaviors. It empirically demonstrates that ESG practice can enhance brand loyalty, brand value, and brand love by improving innovation performance. This result not only expands the theoretical framework of how ESG practice influences the brand value chain but also supports the key theoretical perspectives from Ozturkoglu et al. (2019) [16] and Deegan (2002) [17] that innovation is a source of sustainable competitive advantage for businesses. Furthermore, while some literature suggests that the environmental and social aspects of ESG practice may have a short-term negative impact on firm value [112], this study, by focusing on long-term employee behavior and brand aspects, offers an alternative theoretical perspective on the positive impact of ESG. Specifically, the findings reinforce the strategic role of sustainability in brand development, confirming that sustainability initiatives strengthen brand value by promoting responsible practices and enhancing long-term growth [51].

Third, this study verifies the positive moderating effect of innovative organizational climate on the relationship between ESG practice and innovation performance. This indicates that intangible assets such as organizational systems, culture, and processes can amplify the positive influence of ESG practice on innovative output. This finding is consistent with the theories of Liu (2017) [85] and Dineen & Allen (2016) [70], who propose that an innovative organizational climate facilitates resource transformation and enhances organizational value. For airline companies, this implies that in addition to focusing on external ESG reporting, they must also prioritize the integration of internal resources and the enhancement of management capabilities to adapt to the complex and evolving industry environment.

Finally, this study finds that human capital does not have a significant moderating effect on the relationship between ESG practice and innovation performance. This result suggests that even with a high level of human capital, innovation capability may not be significantly enhanced by ESG practices unless effectively integrated with ESG systems and resource allocation. This finding aligns with prior research which states that the full benefits of human capital’s influence on innovation can only be realized through effective organizational management and strategic integration [89,90]. Furthermore, considering the liberalized and high-risk market environment of the airline industry [113], the strategic combination of human capital and ESG becomes even more critical, offering new directions for future research.

6.2. Empirical Implications

This study provides several managerial implications for the airline and other high-service-intensive industries. First, as a crucial component of corporate sustainability strategy, ESG not only strengthens the trust and support of external stakeholders [114,115] but also stimulates internal employees’ innovative momentum, thereby boosting brand loyalty, brand value, and ultimately, brand love. The finding that transparent sustainability communication helps foster consumer loyalty and brand trust [60] underscores the need for organizations to ensure internal clarity as well. When implementing ESG practices, airlines should concurrently focus on employees’ psychological identification and behavioral performance, viewing ESG as a core force that drives the co-creation of both internal and external corporate value.

Second, this study indicates that innovative organizational climate is a key factor for the positive impact of ESG practice on innovation performance. Previous research also shows that airlines’ ESG practices can enhance brand image and brand love, thereby strengthening customer loyalty [116]. Therefore, Airlines should continuously strengthen institutional management, optimize operational processes, and cultivate a corporate culture that supports sustainable development. This ensures that ESG practices are deeply integrated with internal operations, allowing the sustainability strategy to not only be a tool for building an external image but also to be substantially transformed into innovative outcomes and a competitive brand advantage, effectively responding to the challenges of high carbon emissions and environmental pressure faced by the airline industry [117].

Third, although this study did not observe a moderating effect of human capital between ESG practice and innovation performance, for the airline industry, continuous investment in human capital’s professional capabilities and incentive mechanisms, and their tight integration with ESG goals, is essential for ensuring innovation performance and sustainable development. Through this strategy, airlines can enhance employees’ sense of participation and commitment to ESG, thereby strengthening the company’s overall risk resilience and innovative vitality. This integrated approach is essential for successful sustainable employer branding, which emphasizes transparency, ethics, and inclusivity, enhancing engagement and long-term resilience [68].

Finally, brand loyalty and brand love are critical assets for maintaining long-term competitive advantages in the face of intense market competition and deregulation pressures. This study empirically proves that a virtuous cycle between ESG practice and innovation performance can effectively strengthen employees’ emotional connection and behavioral commitment to the brand. It is recommended that airline companies integrate sustainability strategies, innovation management, and brand operations into a unified strategic blueprint to enhance market competitiveness and social responsibility performance, thereby increasing overall corporate value [118].

6.3. Research Limitations and Future Research

While this study provides valuable insights into the relationships among ESG practices, innovation performance, and brand loyalty—as well as the moderating effects of human capital and an innovative organizational climate—several limitations remain that warrant further investigation. From an ESG perspective, research at Incheon International Airport indicates that implementing environmental, social, and governance practices enhances trust, public image, and sustainability awareness, and improves overall business performance [119]. First, the unique characteristics of the airline industry, such as its substantial environmental impact and high brand visibility, may amplify the influence of ESG initiatives on employee attitudes and behaviors. Regarding sampling, although this study’s focus on employees in the Taiwanese airline industry offers meaningful regional representation, different industries (e.g., finance, manufacturing) may exhibit distinct pathways and underlying logics linking ESG practices to brand strategies. Therefore, future research could extend to other industries and countries to explore potential cross-industry and cross-cultural variations. Similarly, cultural traits may shape how employees perceive and respond to corporate social responsibility activities [120]. Future studies should thus incorporate diverse cultural contexts to develop a more comprehensive understanding of the mechanisms through which ESG practices enhance brand love.

Second, although this study demonstrates a positive impact of innovation performance on brand value and loyalty, ESG represents a long-term strategic approach that not only influences customer relationship management [121] but also deeply shapes employee cognition. Future research could focus on airlines with established, long-term ESG management practices and integrate consumer or employee data to explore the sustained effects of such practices on brand love. Moreover, demographic factors such as gender, age, job role, and seniority may influence employees’ perceptions of ESG practices and, consequently, their impact on innovation and brand loyalty.

Third, this study’s assessment of brand loyalty and brand love relies on employees’ subjective perceptions, which may be susceptible to measurement bias influenced by individual traits, emotions, or the internal organizational climate. Future studies could validate the variations in employees’ perceptions of ESG and investigate how these differences affect their brand attitudes.

Finally, while this study focused on innovation performance as a mediating variable and explored the moderating roles of human capital and innovative organizational climate, other potential mediating variables may exist between ESG and brand identity, such as corporate identity, internal communication quality, employee engagement, and organizational trust, organizational pride, psychological empowerment, and perceived external prestige. It is suggested that future research incorporates more psychological and organizational factors to construct a more complete mechanism model, deepening the understanding of how sustainable practices influence employee attitudes and brand building.

7. Conclusions

The findings reveal that ESG practices positively influence innovation performance, which, in turn, significantly enhances brand loyalty and brand value, ultimately fostering stronger brand love. Furthermore, the study identifies that an innovative organizational climate exerts a significant positive moderating effect on the relationship between ESG practices and innovation performance. In contrast, human capital does not exhibit a significant moderating effect. Overall, these results highlight the critical role of ESG-driven innovation and organizational climate in cultivating long-term emotional connections between employees and the brand.