Bridging the Gap to Sustainability: How Culture and Context Shape Green Transparency in Chinese Firms

Abstract

Green transparency motivates organizations to decrease environmental hazard emissions, improve ecological safeguarding behavior, and increase environmental performance. However, the current literature ignores the cultural and organizational factors behind green transparency behavior, which cannot answer stakeholders how to reduce barriers to green transparency to achieve sustainable goals. This study collected data from 207 Chinese companies listed on three stock exchanges (Beijing, Shanghai, and Shenzhen) through an online survey to unfold the interplay between green transparency and contextual and organizational factors. The collected data were analyzed using PLS-SEM. The analysis revealed that environmental regulations, digitalization, innovation, and gender diversity significantly affect organizational sustainability culture. The findings also revealed that all these factors directly affect the green transparency of Chinese companies. Furthermore, mediation analysis revealed that organizational sustainability culture mediates the relationship between green transparency and all other study constructs. Short-term training programs regarding sustainability, mutual group discussion without gender discrimination, and supporting the use of digital tools may significantly develop a sustainability culture in the company and can improve firms’ green transparency.

1. Introduction

Climate change, overpopulation, environmental degradation, and economic constraints are the biggest hurdles to achieving sustainable development goals [1]. Global warming caused by human activity is also a threat to the world’s sustainable economic growth [2]. Business companies are one of the main consumers of human natural resources and also major polluters worldwide. The business environment seems incompatible with the natural environment hindering the initiatives towards sustainable development like green entrepreneurship, green jobs, and green development [3]. Awareness among different stakeholders is increasing that sustainable well-being of people can only be achieved through efficient use of natural resources, by preserving the environment [4] and green transparency (GT).

Transparency is becoming an important feature of global sustainability governance among companies [5]. It is defined in many ways, such as by clearly revealing information and greater openness in relevant data sharing [6]. GT involves disclosing environmental data in reliable and accessible way, as demanded and supplied by national and international stakeholders. GT is essential for addressing transboundary environmental issues in the private and public sectors. This kind of transparency is multidirectional with environmental data disclosure required from, but also provided to, countries and other stakeholders such as environmental non-governmental organizations, consumers, employees, and the general public [7]. It is sometimes used oppose green hushing and green washing. GT assists in making more efficient and effective sustainability-oriented decision making across public and private companies [8,9]. Some researchers also use the term GT to disclose and share information about companies’ environmental performance with interested people. The International Monetary Fund (IMF) defines GT as “a process by which information about existing conditions, decisions, and actions is made accessible, visible and understandable” [10]. Thus, GT involves disclosing a company’s environmental performance with the interested stakeholders.

Only some companies are created voluntarily, and green decisions in the majority of large firms are driven by stakeholder governance [6,11]. GT enables stakeholders to make conversant decisions, confront disclosure, and hold them accountable. Many researchers argue that companies will never disclose such information voluntarily, making them accountable. Companies disclose important information only to gain their lost pride and legitimacy by highlighting its positive aspects [12]. Greenhushing is a tradition that reports environmental data in the majority of firms because of proper checks and balances in disclosed environmental data. Greenhushing refers to companies purposely keeping quiet about their sustainability goals, even if they are well intentioned or plausible, for fear of being labeled greenwashes.

The existing literature on GT shows a wide range of studies exploring its various dimensions and impacts. For instance, Zhang et al. [13] focus on the influence of GT on firms’ green innovation. Their study examines the role of environmental information transparency in conjunction with factors such as firm size, operating efficiency, ownership structure, growth potential, capital structure, and equity concentration. They conclude that a high GT significantly enhances firms’ green innovation capabilities. Similarly, Yu et al. [14] investigated the effects of environmental, social, and governance transparency on firm value. They identified reduced information asymmetry among investors and lower agency costs as the key mechanisms through which improved ESG transparency positively affects firm value. The extensive literature also explores the relationship between GT and other outcomes, including firm performance, green innovations, corporate environmentalism, and sustainability-oriented practices [15,16,17,18]. Moreover, numerous studies have explored the factors that influence environmental or green information transparency. For example, Dinca et al. [19] highlight the strong impact of workforce size on firms’ willingness to disclose environmental information. Similarly, Caputo et al. [20] underscored the role of corporate social responsibility in promoting GT within organizations.

Although several studies [15,16,17,18] have been conducted on GT, existing research has failed to identify its organizational and cultural drivers in listed companies. According to Xu et al. [21], culture is a crucial element that contributes dynamically to various industrial decisions related to environmental sustainability. A more sustainable culture is assumed to enhance companies’ transparency and disclosure behavior [22]. Thus, addressing these gaps can offer a more comprehensive understanding of the multifaceted drivers of effective GT. Therefore, this study analyzes the dynamic relationship between environmental regulations (ERG), digitalization (DIG), innovativeness (INO), gender diversity (GD), organizational sustainability culture (OSC), and GT. Moreover, this study explored the mediating role of OSC between GT and other constructs.

This study used the partial least squares structural equation modelling (PLS-SEM) technique with data from 207 Chinese companies listed on three stock exchanges in China. The findings of the direct path analysis indicate that ERG, DIG, INO, and GD play crucial roles in determining firms’ OSC and GT. Moreover, the significant mediating role of OSC shows how firms’ OSC can strongly enhance the positive impact of ERG, DIG, INO, and GD on their GT. Therefore, the regular observation on firms’ compliance with environmental regulation, facilitating them to adopt advanced and efficient digital technologies, unbiased selection of diversified and talented employes avoiding gender discrimination, and open employee discussion can enhance the firm’s GT.

The remainder of this paper is organized into various parts as follows. Section 2 presents a literature review and hypothesis development. Section 3 presents the materials and methods that highlight the study’s sampling technique, data collection, and econometric analysis. Section 4 provides a detailed interpretation of the study results, Section 5 provides an extensive discussion of the important findings, and the conclusion is given in Section 6.

2. Hypothesis Development and Review of Literature

Institutional, stakeholder, and organizational cultural theories provide theoretical support for the inclusion of various constructs in this study. Institutional theory is a theory of the deeper and more resilient aspects of a social structure. It considers the processes by which structures, including schemes, rules, norms, and routines, are established as authoritative guidelines for social behavior. This theory highlights the crossing of boundaries through the concept of translation from top to bottom. Translation is an ongoing political process, stressing how the environment influences firms and pressurizes them to comply with its demands [22,23]. Stakeholder theory broadly considers that diversity in the structure of firms can promote firm performance, as it focuses on the actors that can affect or be affected by firms, including employees, societies, shareholders, and customers [24]. This theory describes how organizations greatly consider and acknowledge their stakeholders, promote the understanding and management of stakeholders’ needs, enable firms to enhance their value creation, and protect long-term growth and sustainability [25]. This theory is highly suitable in the context of recognizing the multi-accountability of management to stakeholders [26]. Organizational culture theory describes the micro-organizational dynamics that affect organizations outside the world. This process is emphasized through the dynamics of organizational culture and identity [23]. This theory focuses on the adoption of sustainable practices and strategies by an organization to align with the external pressure from industry expectations, social norms, and regulatory bodies. Moreover, a sustainable culture often develops in response to external pressure to comply with regulations, customer demands, and stakeholders’ expectations. By integrating sustainability into values and practices, firms can attain legitimacy and encounter evolving GT standards.

Disclosing real-time information with stakeholders builds trust and increases confidence in order to lower skepticism [27]. A company can clearly demonstrate multiple messages to the stakeholders through its core values, defined, and implemented in its routine business activities. These messages involve the organization, how to behave within the company, how to interact, how to behave, and how to engage with others outside the company. Therefore, a company that strongly follows and effectively communicates its values; may guide its operational activities in an ethical manner. Thus, if transparency is included in the core values of a company, it can demonstrate that the company is open and honest in its operation, communication style, and culture [28]. Among large companies, the environmental-oriented business activities have been driven by stakeholders’ governess. Transparency assists stakeholders in making informed and effective decisions and hold companies accountable. Adams [29] emphasized that companies usually do not reveal their information unless they are in crises or scrutiny. Moreover, companies only share the positive aspects of their business operations to restore their images or legitimacy [12]. Therefore, without strict standards and regulations, companies often disclose inaccurate and misleading information [30] that lower transparency. Additionally, companies’ governance may ignore environmental accountability or transparency when the regulatory mechanism is weak, and high environmental accountability and transparency are possible because of the high level of regulatory mechanisms. Therefore, the business GT can be increased when stakeholders pressurize them or when strong regulations are imposed on them [31]. Thus, the first hypothesis of this study is defined as follow:

H1. 

ERG have strong positive impact on GT of companies.

The collection of bulk information and sharing it in time with stakeholders is a very challenging task, which lowers the transparency of the business, especially in the case of environmental and social sustainability [32]. Therefore, increasing social inequalities and the rapid depletion of natural resources in an era of high economic growth around the globe have created a hurdle for companies to consider sustainability in their routine business activities [33,34]. In the era of digitalization, digital technologies have transformed business activities, facilitating the transition of companies to sustainable business [35]. The adoption of digital technologies generates digital transformation in companies and redefines business practices and processes [34]. Firms’ digital capabilities improve their routine activities to strengthen information flow [36]. Therefore, companies must revisit their business models to collect, store, and disseminate the information and data that require them to collaborate, facilitate information transparency, and conduct collective data analysis [37,38]. Emerging digital technologies play an interesting role in increasing transparency among multiple stakeholders through improvements in the value-capture mechanism. The benefits of digitalization generate and disclose real-time data information, which creates transparency between relationships with internal and external stakeholders [36]. Therefore, the adoption of communication technologies empowers both internal and external stakeholders creating transparency according to their expectations [39]. For example, digital technologies are an effective way to enhance GT in gross supply chains [32]. GT is a feature of good governance [40], and facilitates communication with stakeholders to make informative and efficient decisions regarding business activities [41]. Thus, the following hypothesis is developed:

H2. 

DIG has significant impact on GT.

Companies are not independent of the natural environment, and routine business operations are strongly affected by it [42]. With the increase in environmental impact, companies must maintain a balance between their economic desires and environmental responsibility [43]. This implies that company must include environmental sustainability in its vision to provide the value to its stakeholders. This results in an increase in the adoption of sustainable practices in business operations [44]. Companies have various options for lowering their environmental impacts to improve their business performance and achieve sustainability. Environmentally oriented business performance is inconceivable without adopting green innovations [45]. An increase in innovation adoption may facilitate the collection and integration of environmental information. Therefore, innovations provide a more sustainable way to enhance the dissemination of real-time green information, and this adoption of innovations increases the quality of the information disclosed [46]. Thus, the following hypothesis is developed:

H3. 

INO of companies have strong positive impact on GT.

Various internal and external factors affect a company’s transparency [47]. GD plays a crucial role in enhancing companies’ GT. GD can be defined as “the way in which gender diversity, roles and interactions affect the firms’ performance and decision making specifically in the context of transparency and sustainable practices by having no discrimination between man and woman”. Men and women naturally differ based on their personal and psychological factors. Males are characterized by self-schemas based on various aspects, including aggressiveness, leadership, exhibitionism, income creation, and independence [48]. On the other hand, women are more caring, submissive, committed, and respectful toward others. However, these features are associated with changes in the female gender over time. Moreover, economic and social scientists have revealed dissimilarities linked to gender, especially in terms of trust and risk aversion [49]. Male managers are more likely to have economic power and are more goal achievers, whereas female managers are more arrogant, universalistic, and sympathetic [50]. GD can play a crucial role in enhancing a firm’s GT, particularly in reporting and governance practices. Arshad et al. [51] described that the inclusion of women in leadership roles promotes ethical behavior, minimizes earnings manipulation, and enhances the quality of financial reporting. Moreover, Shehadeh et al. [52] also demonstrated the strong impact of GD on boards that foster digital reporting practices to make well-informed decisions and increase the engagement of stakeholders. Similarly, female executives significantly minimize information asymmetry, as they are more likely to provide reliable and timely information [53]. Therefore, companies with more female leadership are more likely to have greater transparency, and gender diversity has a strong positive impact on GT [50]. Moreover, the structure and composition of a company’s board strongly affects the dissemination of environmental information [54]. Khan et al. [55] also demonstrated the significant positive impact of the presence of women on performance in environmental disclosure. Women on the board are more likely to discuss environmental issues in the boardroom [56] and encourage the company to follow a more holistic approach to make more effective decisions [57]. Thus, diverse boards and leadership contribute more to disseminating transparent environmental information [58]. Therefore, the following hypothesis was developed:

H4. 

GD has a strong positive impact on GT.

An organizational culture (OC) defines the “pattern of beliefs and values that assist the member of a company to understand why things happen and thus teach them the behavioral norms in a company” [59]. These beliefs are strongly linked to the characteristics of a company, including how employees work together, leadership style, and overall strategic emphasis. Therefore, these beliefs also shape how a company runs its daily routine and how it makes effective and informed decisions [60]. OC plays a crucial role in creating competitive advantage [61] and is considered the most important element for a company’s success compared to operating models or strategies leading to business sustainability. The ethics and values embodied in OC are necessary to promote sustainable business [62]. OSC is its people’s assumptions about the company’s goals, values, beliefs, and expectations with regard to sustainability [63]. Moreover, OSC is also a very important element in the context of management to digitalize the production process [64]. Similarly, OSC facilitates the digitalization process of a company [65]. It also influences innovation and creativity within a company [66]. Similarly, OSC and compliance are also strongly linked, as non-compliant behavior is not only due to personal traits or features of companies, but also affected by the working environment [67]. Thus, when a company has healthy and comfortable OSC, it develops sustainable business practices, leading to a higher GT to win the trust of stakeholders. Therefore, we propose the following hypothesis: Figure 1 presents the hypothesized framework of the study.

H5. 

OSC have a direct positive impact on GT.

H6. 

ERG, DIG, INO, and GD may also have a significant positive indirect impact on GT through OSC.

3. Materials and Methods

3.1. Study Sample and Data Collection

Chinese stock exchanges are vital financial hubs that host major enterprises and drive economic growth in China. Therefore, the study population included all companies listed on the Chinese stock exchange. The study sample was restricted to companies listed on three stock exchanges (Beijing, Shanghai, and Shenzhen). The numbers of companies listed on the country’s Shanghai, Shenzhen, and Beijing stock exchanges were 2263, 2844, and 239, respectively [68]. There were 5113 companies listed on the A-share market, 11 companies listed on the B-share market, and 222 firms listed on multi-share markets [68]. The presence of stock exchanges in these cities indicates their importance in the Chinese economy. This study uses an online survey method to collect data from companies listed on the stock exchanges of these cities.

The data collection instrument consisted of seven sections. The first section explained the purpose and objective of this study to the companies and informed them of their ethical approval and voluntary participation. Subsequently, respondents were guided to the main content of the questionnaire. The second section discusses the role of environmental regulation in the GT of companies measured through ten indicators. The third section of the survey questionnaire aimed to measure the role of digitalization in the GT of companies through nine indicators. The fourth and fifth sections of the questionnaire aimed to measure the role of innovation and gender diversity in companies’ disclosure behavior, and each section contained seven indicators. The sixth section contained eight indicators to unfold the relationship between the role of organizational sustainability culture and GT. The sixth section concerned GT, and the last section included questions related to companies’ profile such as number of employees, turnover, and category. It was shared with company representatives after telephonic discussions through email and WeChat applications. Participation in the survey questionnaire was voluntary, and no personal or company names were required to ensure complete confidentiality. The questionnaire was validated using a two-step process. First, three subject experts, two professors, and an associate professor were consulted to assess the validity of the questionnaire. In the second step of survey instrument validity, a preliminary study was conducted with 20 companies. In the final survey, data from 207 companies listed on the three Chinese stock exchanges were obtained. Of these, 105 companies were listed on the Shenzhen Stock Exchange, 89 on the Shanghai Stock Exchange, and 13 on the Beijing Stock Exchange. Moreover, the majority of companies in the study belonged to manufacturing, information transmission, software, and information technology services, as well as companies in the wholesale and retail sectors. Additionally, 93% of the participating companies in this study were listed on the A-share market, 6% were listed on multi-share markets, and the remaining were listed on the B-share market. This shows that the data are representative and have sufficient diversity to represent all listed companies on Chinese Stock exchanges.

3.2. Empirical Analysis

Structural equation modeling (SEM) combines factor and path analyses to provide a powerful multivariate statistical tool. Statisticians use SEM to analyze the relationships among latent variables. It uses analysis of variance, factor analysis, regression analysis, and path analysis [69]. All variables in this study were latently connected. Therefore, PLS-SEM, the most suitable econometric method for testing the relationships among latent variables, was used in this study. Another reason for using this method is that PLS-SEM is a non-parametric approach that can eliminate distribution assumptions and increase statistical power in studies with small sample sizes [70]. The process of reducing and validating constructs prior to constructing the ultimate structural equation for each latent variable enables the simple verification of item validity through the use of PLS-SEM. Previous studies have established that a minimum of 100 respondents is required to achieve impartial results when utilizing this model [71]. This study relies heavily on the analytical approach proposed by Hair et al. [72]. As Chin [73] indicated, the PLS-SEM methodology consists of a measurement model and a structural model.

The general form of PLS-SEM model including both measurement and structural models is as follows:

$$\mathrm{Y}={\mathsf{\Lambda }}_{\mathrm{y}}\mathsf{\eta }+{\mathsf{ϵ}}_{\mathrm{y}}$$

$$\mathrm{X}={\mathsf{\Lambda }}_{\mathrm{x}}\mathsf{\xi }+{\mathsf{ϵ}}_{\mathrm{x}}$$

$$\mathsf{\eta }=\mathrm{B}\mathsf{\eta }+\mathsf{\Gamma }\mathsf{\xi }+\mathsf{\zeta }$$

where,

• Y and X are matrices of observed variables;
• Λ_y and Λ_x are matrices of factor loadings;
• B is a matrix of path coefficients among endogenous latent variables;
• Γ is a matrix of path coefficients between exogenous and endogenous latent variables;
• η and ξ are vectors of latent variable;
• ζ is a vector of residual terms.

4. Results

The findings of the descriptive analysis of ERG present a mixed picture of companies’ compliance with ERG to increase their GT. The overall mean score of the ERG was 3.65, suggesting a medium level of consensus among companies with 10 different individual items concerning ERG. Companies deliberately present their intention to follow the ERG to develop transparent sustainability practices (ERG6), as indicated by the highest average score of 4.79. This implies an overall favorable tendency toward integrating ERG in formulating a sustainable operational framework. Moreover, companies consider ERG as a prime aspect of their GT (ERG10), with an average of 4.58. The companies expressed medium-to-high levels of agreement with all other individual items, including ERG3 and ERG9. For example, they follow ERG to develop their sustainability goals and then transparently share the progress toward achieving those goal (ERG3), and keep the document public about their strategies to comply with ERG (ERG9).

The findings also reveal the considerable impact of DIG on companies’ GT. The average score of 3.87 with a standard deviation of 1.31, describes the noticeable but not extremely significant agreement of companies with the use of DIG to enhance their GT. The mode of DIG3 is equal to 5, and the average score of 4.67 indicates that the companies have expressed their strong agreement with the use of digital tools to develop and disseminate the reports on their environmental performance to the stakeholders. Subsequently, the companies depicted a medium level of agreement with the availability of transparent information regarding their green initiatives and their outcomes on their websites (DIG2 = 3.92). Generally, companies expressed a medium level of agreement (average score less than 4 greater than 3.50) with digital tools and platforms to share updates about environmental sustainability efforts (DIG1), communicate clearly about sustainability goals and achievement (DIG4), highlight the progress and challenges in achieving their sustainability targets (DIG5), transparent and real-time reporting of environmental impact data (DIG6), enhance the visibility of green practices (DIG7), provide interactive digital content to stakeholders (DIG8), and solicit stakeholders’ feedback about environmental efforts.

The average GD score of 4.01 depicts the considerable strong impact of GD on companies’ GT. The highest average of GD1 (4.78) implies that companies promote gender diversity in leadership roles to enhance the GT of the company. Similarly, gender diversity has a strong impact on the adoption of innovative and transparent sustainability practices (GD5). Among the other items, the averages scores were in the range of 3.50 to 4.00 which clearly implies that gender diversity can play major role in enhancing the GT of the companies.

The OSC outcomes reveal that companies gave the highest rating to OSC, with an average of 4.27, implying that OSC has a strong impact on the GT of companies. Companies clearly acknowledge sustainability as a core value in the mission, vision, and corporate goals of their companies (OSC8), as indicated by the highest mode (=5) and average (=4.93). This indicates that companies consider sustainability a crucial factor in enhancing their GT. Similarly, companies consistently perceive that they encourage their employees to actively participate and suggest sustainability initiatives and eco-friendly practices (OSC6). Moreover, the companies strongly perceived their organizational culture as supporting innovative practices to enhance their environmental practices (OSC1 = 4.63) and prioritizing digital tools that facilitate the transparent reporting of environmental practices (OSC3 = 4.59). The companies also have a high level of agreement with OSC4 and OSC7, with an average of 3.96 and 3.91, respectively. This implies that organizational culture supports gender diversity (OSC4) and regular investment in innovative technologies to lower their environmental impact (OSC7) to enhance GT. The companies also acknowledged that they have an organizational culture that complies with government regulations to enhance GT (OSC2 = 3.87).

Findings regarding GT depict great diversity among companies’ responses (

Table 1. Description of constructs.

Constructs	Mode	Mean
Environmental Regulations (ERG)		3.65
ERG1	3	3.01
ERG2	4	3.67
ERG3	4	3.89
ERG4	4	3.22
ERG5	4	3.75
ERG6	5	4.79
ERG7	4	3.44
ERG8	4	3.57
ERG9	3	3.88
ERG10	5	4.58
Digitalization (DIG)		3.87
DIG1	4	3.67
DIG2	4	3.92
DIG3	5	4.67
DIG4	4	3.88
DIG5	4	3.75
DIG6	4	3.83
DIG7	4	3.68
DIG8	4	3.77
DIG9	4	3.69
Innovativeness (INO)		3.54
INO1	4	3.77
INO2	4	3.81
INO3	3	2.85
INO4	4	3.69
INO5	4	3.28
INO6	4	3.73
INO7	4	3.63
Gender Diversity (GD)		4.01
GD1	5	4.78
GD2	4	3.66
GD3	4	3.82
GD4	4	3.59
GD5	5	4.62
GD6	4	3.73
GD7	4	3.82
Organizational Sustainability Culture (OSC)		4.27
OSC1	5	4.63
OSC2	4	3.87
OSC3	5	4.59
OSC4	4	3.96
OSC5	4	3.59
OSC6	5	4.71
OSC7	4	3.91
OSC8	5	4.93
Green Transparency (GT)		3.33
GT1	4	3.62
GT2	4	3.71
GT3	4	3.28
GT4	4	3.58
GT5	3	2.81
GT6	3	2.94
GT7	3	2.78
GT8	4	3.63
GT9	4	3.61

). The overall average of 3.33, implies that companies have a medium level of GT. Companies have a great consensus on the active use of social media to disseminate their green initiatives and achievements (GT2). The companies revealed almost the same level of agreement with GT1, GT8, and GT9 with averages of 3.62, 3.63, and 3.61, respectively. Companies openly share their details of innovative environmental technologies with the public, display their environmental sustainability efforts prominently in online communication and marketing, and report their green initiatives using digital tools to external stakeholders.

Considering the overall mean of all constructs, the mean for OSC (4.27) and GD (4.01) was greater than the mean of all other constructs, such as ERG, DIG, INO, and GT. This finding indicates a foundational or pervasive role in firms’ overall GT. Therefore, OSC and GD are deeply embedded in the basic framework of firms and indicate that firms consider the strong OSC and diverse employment and leadership as fostering transparency.

4.1. Validating Measurement Model

The validity of the measurement model is very important for unbiased results. To assess the measurement validity, convergent validity (CV) is a widely used tool which analyzes the extent to which different indicators or measurements are correlated with each other in relation to the underlying latent variable or construct. CV provides information about whether all indicators depict a similar pattern or correlation, leading to the same outcomes. Therefore, CV is crucial to confirm and obtain consistent and reliable metrics. Its absence leads to ambiguity and measurement problems, which lowers the reliability of the results. To assess the CV of the measurement model, we considered three different tools: factor loading (FL), composite reliability (CR) and average variance extracted (AVE).

FL measures the relationship between the indicators and latent variables and constructs. It provides the magnitude of the relationship between each indicator and the underlying latent variables. A high FL value indicates a strong and reliable relationship between the latent variable and its individual indicators. In the current study, all the individual indicators under each construct had an FL greater than 0.70 (

Table 2. Convergent validity.

Constructs	Factor Loadings	Cronbach Alpha	CR	AVE
Environmental Regulations (ERG)		0.835	0.958	0.698
ERG1	0.945
ERG2	0.935
ERG3	0.927
ERG4	0.916
ERG5	0.894
ERG6	0.866
ERG7	0.849
ERG8	0.837
ERG9	0.825
ERG10	0.829
Digitalization (DIG)		0.812	0.950	0.680
DIG1	0.946
DIG2	0.927
DIG3	0.917
DIG4	0.895
DIG5	0.864
DIG6	0.839
DIG7	0.827
DIG8	0.819
DIG9	0.801
Innovativeness (INO)		0.822	0.937	0.679
INO1	0.944
INO2	0.929
INO3	0.935
INO4	0.901
INO5	0.883
INO6	0.867
INO7	0.834
Gender Diversity (GD)		0.806	0.924	0.635
GD1	0.945
GD2	0.938
GD3	0.917
GD4	0.873
GD5	0.859
GD6	0.841
GD7	0.826
Organizational Sustainability Culture (OSC)		0.825	0.941	0.666
OSC1	0.945
OSC2	0.917
OSC3	0.894
OSC4	0.867
OSC5	0.849
OSC6	0.832
OSC7	0.819
OSC8	0.810
Green Transparency (GT)		0.831	0.935	0.615
GT1	0.946
GT2	0.928
GT3	0.925
GT4	0.900
GT5	0.893
GT6	0.864
GT7	0.829
GT8	0.810
GT9	0.807

Composite reliability (CR), and average variance extracted (AVE).

), a threshold level of FL [74]. This implies a strong relationship between the indicator and the underlying construct. According to Steiger [75], an FL greater than 0.80 describes the greater variance associated with the latent variable. All values of FL higher than 0.80 depicts the existence of a strong FL, which leads to a greater CV of the measurement model.

Cronbach’s alpha quantifies the extent to which a set of indicators in a latent variable is consistent internally. It indicates the degree of correlation between indicators inside the latent variable. A Cronbach’s Alpha value beyond 0.70 or 0.80 demonstrates that the indicators significantly measured the shared underlying construct. Therefore, an Alpha score greater than 0.80 for all constructs confirms the existence of internal consistency and reliability, which indicates the appropriateness of the indicator scale for further research.

The alternative approach to Cronbach’s Alpha is CR, which also measures the internal consistency of a set of indicators or items in an underlying construct [1,76]. A CR value greater than the threshold of 0.60 demonstrates the existence of CV. The measurement model had a reasonable fit when the value of CR was greater than 0.70. Moreover, if the value is greater than 0.80, it not only confirms the correctness of the measurement model, but also indicates strong validation. The values of CR for all constructs in the current study are greater than 0.80, which also confirms the reliability and enhances the overall validity of the research.

The AVE measures the amount of variance that an underlying construct explains in its indicators. AVE measures the extent to which indicators in a construct describe shared variance. If the threshold level of AVE was greater than 0.50, this indicates that more than 50% of the variance was accounted for by the construct. Therefore, all the constructs’ AVE scores were greater than 0.50 which confirms the CR of measurement model.

The next step is to confirm the discriminant validity (DV) of the measurement model. DV demonstrates that constructs are independent of each other.

Table 3. Discriminant validity.

Fornell–Larcker Criterion
Constructs	ERG	DIG	INO	GD	OSC	GT
ERG	0.835
DIG	0.352	0.825
INO	0.463	0.352	0.824
GD	0.273	0.164	0.174	0.797
OSC	0.187	0.262	0.163	0.352	0.816
GT	0.372	0.415	0.173	0.165	0.261	0.784
Heterotrait-Monotrait Ratio (HTMT)
Constructs	ERG	DIG	INO	GD	OSC	GT
ERG
DIG	0.243
INO	0.415	0.362
GD	0.267	0.263	0.273
OSC	0.371	0.176	0.362	0.173
GT	0.462	0.263	0.173	0.362	0.276

Environmental regulations (ERG), digitalization (DIG), innovativeness (INO), gender diversity (GD), organizational sustainability culture (OSC), and green transparency (GT).

depicts the two different methods used to confirm the DV of the model, including the Fornell–Larcker criteria (FLC) and the heterotrait-monotrait ratio (HTMT). In the FLC, the square root of the AVE of each construct was measured and compared with the correlation scores of each individual indicator with other constructs. When the square root value of the AVE of a construct is greater than its correlation coefficients with other constructs, this confirms DV [77]. Similarly, an HTMT below 0.90 substantially demonstrates the existence of DV [78]. This indicates that the indicators within each construct have a strong relationship with their own construction.

The goodness-of-fit parameters of the PLS-SEM model are listed in

Table 4. Goodness of fit parameters of the PLS-SEM model.

Fitness Tests	χ2/df	CFI	GFI	AGFI	NFI	RMSEA
Critical values	<3.0	>0.90	>0.90	>0.90	>0.90	<0.08
Computed values	2.11	0.941	0.925	0.927	0.915	0.051

Goodness of fit index (GFI), comparative fit index (CFI), adjusted goodness of fit index (AGFI), normed fit index (NFI), root means square error of approximation (RMSEA).

. χ²/df indicates the adequacy of the model’s fit with respect to the degree of freedom. A value of χ²/df below the threshold level indicates a highly satisfactory fit. The CFI (comparative fit index) measures the model’s fit in comparison to the null model. The CFI score was 0.941 (>0.90), indicating that the model fit was significantly better than that of the null model. The GFI (goodness of fit index) demonstrated how well the model explained the observed data. Therefore, both the GFI and AGFI (adjusted goodness of fit index) have values greater than the threshold level (>0.90). Thus, a GFI of 0.925 shows that the model explains 92.5% of the variation in the observed data. Moreover, an NFI equal to 0.915 (>0.90) also indicates a superior fit of the model compared to the null model. Overall, all parameters confirmed the overall validity of the PLS-SEM model, which indicated that the PLS-SEM model strongly and satisfactorily aligned with the observed data.

4.2. Direct Path Analysis

To analyze the connections between ERG, DIG, INO, GD, OSC, and GT, we used PLS-SEM path analysis. Furthermore, R², f², and Q² scores in

Table 5. Direct path analysis.

Paths	Beta-Value	Std. Err.	t-Value	f2	Q2	R2	Decision
ERG → OSC	0.104	0.026	3.944	0.483	0.203	0.564	Accepted
DIG → OSC	0.107	0.032	3.353	0.575	0.264	0.653	Accepted
INO → OSC	0.356	0.056	6.335	1.094	0.323	0.687	Accepted
GD → OSC	0.464	0.152	3.041	2.448	0.418	0.786	Accepted
ERG → GT	0.483	0.173	2.792	0.862	0.225	0.648	Accepted
DIG → GT	0.382	0.084	4.531	0.982	0.352	0.623	Accepted
INO → GT	0.502	0.103	4.874	1.419	0.370	0.732	Accepted
GD → GT	0.027	0.012	2.258	0.486	0.229	0.587	Accepted
OSC → GT	0.392	0.052	7.538	1.635	0.231	0.754	Accepted

Note: p < 0.01 when t-value is greater than 2.32. Environmental regulations (ERG), Digitalization (DIG), Innovativeness (INO), Gender diversity (GD), Organizational sustainability culture (OSC), and Green transparency (GT).

were used to examine the explanatory power and quality of the model in the PLS-SEM. The R² value signifies the quantity or extent to which the model demonstrates the variability in endogenous variables. Moreover, f² measures the magnitude of the effect size and Q² indicates the prediction accuracy of the model. Therefore, all these metrics provide a thorough comprehension of the model’s ability to emphasize the practical implications of the connections between variables and predictive capacities, which makes the evaluation of the model’s performance easy.

A beta-value of 0.104 and a t-value of 3.944 signify a significant relationship between ERG and OSC. The f² value of 0.483 demonstrates the practical importance of the relationship between ERG and OSC, while Q² equal to 0.203 signifies the model’s predictive validity of this relationship. The R² value of 0.564 shows that the ERG has a considerable role in explaining the variation in companies’ OSC, leading to the acceptance of this link. The f² (=0.575) and Q² (=0.264) values also depict the substantial practical and predictive significance of the DIG and OSC relationship. The R² of 0.653 also demonstrates the important role of companies that support the acceptance of this this relationship in developing OSC. The role of INO in developing OSC is justified by the significant beta value of 0.356, with a t-value of 6.335. F² (=1.094), Q² (=0.323), and R² (=0.687) provided robust evidence for accepting the relationship between INO and OSC. The significant and positive beta-value of 0.464 and t-value of 3.041 reveal that GD has a positive relationship with OSC. Moreover, the f² (=2.448) and Q² (=0.418) values for the GD and OSC relationships confirmed the practical and predictive significance of this relationship. The R² of 0.786 indicates that GD substantially contributes to explaining the variation in the companies’ OSC.

The positive beta value of 0.483 and the t-value of 2.792 reveal that ERG also has a direct significant and positive relationship with GT of companies. This relationship also has substantial practical and predictive significance according to the f² and Q² values. The R² of 0.648 also indicates that ERG also strongly explains the variation in GT. DIG, INO, and GD also had significant positive relationships with GT. The f² and Q² values for DIG, INO, and GD demonstrate that these variables also have practical and predictive significance. Moreover, the R² values (DIG = 0.623, INO = 0.732, GD = 0.587) confirm that DIG, INO, and GD also substantially contribute to explaining the variation in GT, which provides robust evidence to support the relationships between GT and DIG, INO, and GD. The direct impact of OSC on companies’ GT was found to be significant and positive with a beta value of 0.392 and a t-value of 7.538. An f² value of 1.635 signifies a large effect size, which confirms the practical significance of this relationship. A Q² of 0.231 also confirms the significance of this relationship. The R² value of 0.754 indicates that the OSC of a company extensively demonstrates variation in GT.

4.3. Mediation Effects

The mediation effect (

Table 6. Indirect path analysis.

Paths	Beta-Value	Std. Err.	t-Value	p-Value	C.I.	Decision
ERG → OSC → GT	0.041	0.009	4.670	0.000	0.001, 0.189	accepted
DIG → OSC → GT	0.042	0.010	4.165	0.000	0.007, 0.203	accepted
INO → OSC → GT	0.140	0.037	3.800	0.000	0.095, 0.271	accepted
GD → OSC → GT	0.182	0.029	6.180	0.000	0.055, 0.301	accepted

Note: p < 0.01 when t-value is greater than 2.32. Environmental regulations (ERG), digitalization (DIG), innovativeness (INO), gender diversity (GD), organizational sustainability culture (OSC), and green transparency (GT).

) of OSC between ERG, DIG, INO, and GD on companies’ GT was analyzed by adopting the approach of Preacher and Hayes [79]. The positive beta value (0.041) of the indirect effect of ERG on GT through OSC with a t-value of 4.670 indicates that ERG may have a positive impact on GT through OSC. This implies that ERG significantly increases the GT of companies through OSC. Similarly, the indirect effects of DIG, INO, and GD on the GT of a company through OSC were also positive and significant. This also demonstrates that DIG, INO, and GD also substantially enhance the GT of the company through OSC.

5. Discussion

GT is crucial for the development of trust and the creditability of stakeholders, especially to win the confidence of investors and customer loyalty [80]. GT refers to the dissemination of information on environmentally oriented practices, policies, and performance. Companies integrate eco-friendly considerations into their core business plans and strategies, leading to long-term, sustainable growth. In light of the growing concern of communities around the world regarding the promotion of sustainable development, it is necessary to disclose full and complete information regarding business strategies leading to increased GT. Thus, the current study analyzed the complex relationship between the ERG, DIG, INO, GD, OSC, and GT. Based on descriptive analysis, the companies indicated a medium-to-high level of agreement with the role of ERG, DIG, INO, GD, and OSC in enhancing their GT toward achieving sustainability. Moreover, the current study used PLS-SEM to evaluate the interrelationships among latent variables.

The positive and significant impact of ERG on firms’ GT is aligned with the findings of Polizzi and Scannella [81], and García-Sánchez et al. [82]. They also found a favorable impact of regulatory interventions on environmental disclosure, particularly in high-pollution sector firms. Salzillo et al. [83] highlighted the impact of regulations like Directive 2014/95/EU on disclosing the non-financial information (social and environmental), as they also found an improvement in disclosing the socio-environmental information. The ERG forces companies to disclose information about environmental impacts and ensure that companies provide accurate and comprehensive information. The ERG clearly demonstrates the type of data necessary to share and create consistency when providing comprehensive reports across different companies. To follow the ERG, companies have begun to adopt eco-friendly strategies and practices to lower their environmental impact [84,85], which enables them to share information with great confidence to increase their GT [86]. Polizzi and Scannella [81] indicate that the Paris Agreement and French Law 2015-992 improved environmental information disclosure among listed firms in Europe, and García-Sánchez et al. [82] also described the significant impact of European Green Deal and related regulations on the disclosure of environmental information by multinationals, leading to high transparency. The ERG forces companies to meet their required standards, which ultimately facilitates companies to disclose their activities to all stakeholders to garner their support [87]. Generally, disclosing information about the environmental impact leads to safeguarding the brand of companies and assists in capturing the other market. Under the ERG umbrella, companies disclose what they already do [88]. Therefore, companies with higher regulatory pressure are more likely to provide information regarding environmental practices and strategies to show their compliance with ERG [87].

DIG is crucial for enhancing companies’ GT. DIG facilitates companies to improve the quality of internal control, environmental, social, and governance standards, and increases GT by disseminating information regarding environmental strategies [89,90]. Our findings regarding the impact of DIG on GT are in line with those of Leitoniene and Kundeliene [91], who demonstrated that companies gradually increase their environmental information disclosure by adopting DIG in their sustainability reporting, particularly during the pandemic. The use of DIG by companies facilitates the collection of accurate data to easily disclose their environmental impacts over time. This lowers the chance of reporting errors and provides more reliable information and data on environmental initiatives. DIG enables companies to observe their business activities in order to meet regulatory requirements before deadlines. Moreover, DIG provides a platform for stakeholders to obtain up-to-date information about goals and achievements. DIG assists companies with processing internal information and lowers the chance of discrepancies in the information provided to stakeholders. Marquardt and Losa-Jonczyk [92] highlight the positive impact of digital communication on environmental, social, and governance aspects in order to increase transparency in building stakeholders’ trust. Therefore, DIG can lower information asymmetry between companies and stakeholders by facilitating the collection, analysis, and dissemination of information over time [93]. Similarly, Yang et al. [94] described the positive role of digitalization in improving information transmission efficiency to enhance environmental performance. DIG is a powerful tool that efficiently analyzes information and data to identify the best green technology and sustainable development. Moreover, DIG solves the problem of information asymmetry between the financial department of a company and investors according to the features of new green technologies and sustainable development [95].

The significant positive impact of INO on Gt can be demonstrated by Oriekhoe et al. [96], who confirmed the role of advanced technologies in enhancing information transparency by providing reliable and real-time information to stakeholders. Hauschild and Coll [97] also stated that technical innovations can capture the right and real-time information on environmental sustainability, thereby providing effective transparency. The adoption of innovative green technologies enables companies to accurately monitor their environmental performance. Innovative companies can observe energy use, track carbon emissions, and manage waste. Therefore, companies can collect more efficient and precise data, which enhance their GT by sharing reliable information. Additionally, disclosing information about green INO in annual reports leads to stakeholder trust [98]. Zakutniaia and Hayriyan [99] emphasized that INO is crucial for a company’s success. They stated that INO-driven companies must become more open and that their transparency generates more competitive advantages. Our findings regarding the impact of INO are in line with those of Luo et al. [46], who found that innovation in technologies positively correlates with the quality disclosure of environmental information in A-share companies in China. Moreover, INO also reduces the chance of human error in the collection and dissemination of information about sustainability and green strategies to lower the environmental impact and enhance the authenticity of information. Sandker et al. [100] state that INO facilitates the disclosure of timely and reliable information to international bodies, increasing global efforts to promote information transparency.

The strong and positive impact of GD on GT also provides important insights for companies to enhance their GT to achieve their sustainability goals. GD introduces diverse ideas [101] to achieve sustainability. Moreover, GD-based leadership in a company may foster honesty and accountability to develop more effective environmental policies and make inclusive decisions. Female leaders are more sustainability-oriented and prefer sustainable and transparent eco-friendly practices [102,103]. Similarly, GD can facilitate more effective communication with stakeholders [101]. Our findings align with those of Pinheiro et al. [104], who highlight that organizations with more female employees on their boards are more likely to have greater GT. Similarly, considering climate-related disclosures, Dias et al. [105] described the favorable impact of GD in disclosing climate change-related risks and opportunities, and also demonstrated the positive role of GD in firms’ GT. Sasidharan et al. [106] also found the positive impact of GD on environmental-, social-, and governance-related disclosure.

The success and achievement of a company are significantly affected by its organizational culture. The current study indicated a strong positive impact of OSC on GT. These findings are similar to those of Soares et al. [107] and Covas [108], who described the importance of organizational culture with a balanced profile as more likely to report sustainability indicators more effectively. Moreover, in the context of administrative culture, Navarro-Galera et al. [109] found a significant impact of organizational culture on sustainability transparency. OSC prioritizes the sustainable development of a company and lowers the environmental impact of business activities. Organizational culture is crucial for business sustainability [64]. Similarly, due to the OSC in companies, more environmentally oriented employee behavior is developed. Sustainability is integrated into the mission and vision of the company, which is crucial for GT. OSC fosters compliance with regulations, promote digitalization, and generate diverse gender leadership to increase investment in eco-friendly practices and develop open communication channels for high GT. The indirect effects of ERG, DIG, INO, and GD on GT reveal that all these variables increase GT through OSC. This implies that OSC has a strong mediating role among the variables. Its importance is increasing because of the rise in globalization and digitalization around the world, and the expansion of remote information exchange [64]. Therefore, a company’s culture plays a crucial role in determining its organizational phenomena [110], and differences in the culture of a company may be due to its different sustainability beliefs and practices [62]. OSC facilitates the development of effective environmental strategies [111]. The managerial team, employees, and leaders greatly matter in developing the culture to disseminate a set of values to achieve the firm’s goals [60]. Accordingly, the company adopts the values of OSC throughout the organization and is mostly summarized in mission statements for all employees [112]. Similarly, OSC may lead employees to adopt eco-friendly technologies or innovations as a core value of the company and drive the adoption of innovation strategies [113]. This increases sustainability, thereby leading to GT. Therefore, OSC ensures compliance with regulations, promotes digitalization and innovation, and encourages gender diversity to increase transparent and sustainable strategies. Moreover, OSC engages, informs, and motivates employees to unify their endeavors toward achieving GT and garnering the support of stakeholders.

Although this study makes valuable contributions to the literature, its findings should be interpreted with certain limitations in mind. First, the cross-sectional nature of the study limits its ability to establish causal relationships between constructs. Future longitudinal research could provide deeper insights into temporal dynamics and causal linkages. Second, the data were collected solely from listed companies, making the results less generalizable to unlisted companies that may operate under different conditions. Third, the reliance on company representatives as respondents introduces the possibility of response bias because their views may not fully reflect organizational practices. Future studies should include multiple data sources such as external audits and stakeholder surveys to enhance validity. Fourth, this study highlights key factors influencing GT, but may overlook variables such as industry dynamics, a share of foreign capital, and human capital. Human capital has been broadly shown to be a key factor in modern economic growth [114,115], and an increase in the general levels of human capital among stakeholders and companies’ governance can be associated with further improvements in firms’ GT. Future research should explore these aspects using a mixed methods approach. Additionally, as the study focuses on Chinese companies, its findings may not apply universally given the varying cultural and regulatory contexts. Comparative studies across regions and industries could offer a more comprehensive understanding of the factors influencing GT.

6. Conclusions

GT is a crucial factor in the success and sustainability of a business. This significantly contributes to the development of a strong relationship between the company and its stakeholders. GT involves disclosing real-time information regarding eco-friendly initiatives, practices, and strategies to enhance sustainability by building trust with stakeholders. The current study aimed to evaluate the complex relationship between ERG, DIG, INO, GD, OSC, and GT. Moreover, the indirect effect of all these variables on GT through OSC was explored. For this purpose, a PLS-SEM analysis was applied to the data collected from 207 listed companies.

The descriptive analysis revealed diversity in companies’ responses to the different items considered for measuring ERG, DIG, INO, GD, OSC, and GT. The companies show a moderate level of agreement regarding the role of ERG, DIG, and INO in GT and the highest level of agreement regarding the role of GD and OSC in GT. Convergent validity through factor loadings, Cronbach’s Alpha, composite reliability, average variance extracted, and discriminant validity confirmed the internal consistency, reliability, and independence of each construct, respectively. This is justifiable for further analysis. Path analysis revealed a significant and positive direct impact of ERG, DIG, INO, GD, and OSC on GT. This implies that a high level of compliance with environmental regulations and openly sharing this communication enhances companies’ GT. Similarly, using DIG to compile and record data, prepare reports, and regularly share transparent and real-time information also strongly contributes to GT. Moreover, using innovative technologies, and highlighting and showcasing green innovation strategies or practices to clearly communicate the INO to stakeholders encourages the company to increase its GT. Additionally, encouraging GD by promoting the active role of female employees and gender-based teamwork strongly contributes to business sustainability, which enhances GT. OSC is also crucial for enhancing GT through collaboration among employees. Therefore, a firm’s culture increases GT by encouraging compliance with regulations, promoting the adoption of innovation, prioritizing the use of digital tools, supporting gender equality, and considering sustainability as the core value of the company’s mission and vision. ERG, DIG, INO, and GD extensively increased GT through OSC.

Based on the findings of this study, the following policy implications are suggested to increase transparency. To increase GT, governmental institutes must regularly observe compliance with environmental regulations, which makes companies confident in sharing real-time business activities. Similarly, short- and long-term loans with an easy payback process can facilitate companies to use digital tools, adopt innovative strategies to lower their environmental impact, and facilitate the timely dissemination of information that directly affects GT. The company may hire male and female employees and leaders after the unbiased selection and proper screening of their attitudes and behaviors toward sustainability. To develop a sustainability culture in the company, short-term training programs regarding sustainability, mutual group discussions, encouraging the most eco-friendly pieces of advice, talking about employees without gender discrimination, and supporting the use of digital tools (sustainability reporting software, blockchain technology, data visualization tools, digital auditing platforms, IoT, and sensor technology) may significantly enhance the impact of other favorable factors on firms’ transparency.