THE INFLUENCE OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PRACTICES (ESG) ON ORGANIZATIONAL SUSTAINABILITY PERFORMANCE: THE MEDIATING ROLE OF CORPORATE REPUTATION

Abstract

This study examines how organizational practices shape sustainability performance within manufacturing firms, with a particular focus on the mechanisms through which these effects are realized. Drawing on Stakeholder Theory, the research adopts a quantitative, cross-sectional design and collects data from 457 senior managers working in textile, food processing, and chemical manufacturing sectors in Pakistan. The study employs Partial Least Squares Structural Equation Modeling (PLS-SEM) using SmartPLS, alongside SPSS for preliminary analysis, to test the proposed relationships. The findings reveal that environmentally responsible actions significantly enhance sustainability performance by improving resource efficiency and strengthening stakeholder trust. Socially oriented initiatives also demonstrate a positive impact, highlighting the importance of employee well-being, ethical conduct, and community engagement in fostering long-term organizational success. Governance practices emerge as a critical driver, emphasizing the role of transparency and accountability in aligning organizational actions with stakeholder expectations. In addition, corporate reputation is found to exert a strong influence on sustainability performance, reflecting the importance of stakeholder perceptions and trust in translating organizational practices into tangible outcomes. The study contributes to the literature by offering an integrated framework that connects organizational practices with performance outcomes through stakeholder-oriented mechanisms. It provides practical insights for managers and policymakers seeking to enhance sustainability performance in emerging economies.