green business research paper

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

We're Hiring!
Help Center

AN ANALYTICAL STUDY OF GREEN BUSINESS PRACTICES IN INDIA WITH SPECIFIC REFERENCE TO SELECTED INDIAN COMPANIES

Sustainable business, or a green business, is an enterprise that has minimal negative impact on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. The notion of ―green business‖ emerged at the end of the 20th century in the wake of the ever-increasing public concern about the sustainability of economic development. The latter, in turn, was roused up by the growing awareness of environmental issues such as the accelerating depletion of natural resources and the deterioration of environmental quality. While the origins of the modern ―green movements‖ can be traced down to the middle of the 1960s, it took almost 20 years for business to adapt to the ―greening‖ trends and adopt them into its ideology and practice, coining the term ―green business‖ for that purpose. However, even today, the substance of the green business concept is rather ambiguous as demonstrated by the variety of its definitions that could be found in different sources. Green business practices are still far from being universally embraced and applied by business entities around the world, with perceptible differences of business penetration by the ―green‖ ideas in various countries. This is due to several reasons, one of them being the fact that the ―greening of business‖ is still largely perceived as an extra burden (in terms of cost increase or revenue loss), and the other reason being related to the national specifics in terms of cultural, political, and economic differences .The paper highlights the relevance of green business practices in current scenario and analyzes how these practices are implemented by selected reputed companies in India and what impact it has on their performance and efficiency.

Related Papers

Journal ijmr.net.in(UGC Approved)

This study on the environmental accounting disclosures and performance of selected manufacturing firms in Nigeria was prompted as a result of mixed, inconsistent and contradictory results from various studies carried out in this area and also because of the increasing stakeholders demand for the disclosure of the management of environmental issues in the annual reports and accounts of manufacturing firms. Thus, the study examined the relationship between environmental accounting disclosures of selected manufacturing firms and their return on assets, net profit margin and earnings per share. Correlation research design was employed in the study and time series data of 40 randomly selected quoted manufacturing firms were collected from their annual reports and analyzed using point bi-serial correlation analytical tool with the help of SPSS version 23. The findings revealed that there exists a significant and positive association between environmental accounting disclosures and earnings per share, return on assets, net profit margin, firm's age and audit firm type. We concluded based on the findings that environmental accounting disclosures influences performance of firms and It was recommended that government and standard setters should develop a standard framework for the mandatory disclosure of corporate environmental information to ensure uniformity, consistency and comparability of environmental information, enhance performance of firms and allow stakeholders to know when these firms are environmentally responsible.

GM is a new and important agenda of the world emerging as solution for sustainability related problems of manufacturing industries. Despite, its urgency to be practiced, the issue is even not has been understood by the world communities and researchers in consistent and similar fashion. Hence, there are even no sufficient reviewed literatures concerning theories related to GM practices and no standardized tool to describe practices. To this effect, this paper has developed tools used for GM description and made simple revision of related literature. Accordingly, the specific objectives of the review were: 1 To develop comprehensive tool that helps to assess GM practices, 2. To review major theories related to GM practices, 3. To identify future research areas concerning GM for developing countries like Ethiopia. To attain these objectives simple review method and contextualization of the concepts to the practical environment of the manufacturing industry, especially of the Ethiopian context were employed. Accordingly, to test the validity of the GM practices assessment tools developed by the reviewer; two experts of the area were consulted to check the authenticity and appropriateness of the content. Whereas its reliability was tested using cronbatch alpha by feeding data collected from one of the cement manufacturing industry in Ethiopia using 63 respondents. Accordingly, major theories relate to GM were reviewed, comprehensive tools used to measure GM practices were developed, and future research areas were recommended. Thus, the following were the advises forwarded for future researchers to: assess GM practices in pollutant manufacturing industries including their policy practices, identify pollutant industries and barriers hindering the GM practices in developing countries, especially identifying the critical ones is very important, and to substantiate why GM is important by identifying the drivers for GM, especially identifying the major ones are highly recommended.

Green banking is new concept in the financial sector from last two decades. As banking transactions involve more paper on daily basis it is the conscientiousness of banking sector to induce the general public to move from traditional practices to green banking practices. More than government, banks dictate the public in a growing economy like India. It is considered easy to persuade the general public to practice eco-friendly living through the banking sector. Hence the present study intends to find the performance of nationalized public sector banks using green banking concept as a yard stick. Bank customers are selected as the respondents for the survey. Major focus of the study is on the implementation part of green banking practices in the selected public sector banks. To have maximin approach, the creamy layer of public sector banks is mulled over in this study to access the public sector banks' performance with respect to installation of green banking initiatives.

Global warming, pollution and climate change are some of the problems that have become an increasingly concerning issue internationally, also Indonesia. In Indonesia there is a fairly complicated plastic that is difficult to recycle, the amount of waste discharged into the river, forest damage due to the illegal logging. Therefore, the impact are the flood, the warming of the earth that causes rising seawater. The purpose of research to determine the effect ofGreen Product, Price Perception, Green Advertising to Purchase Decision which mediated by Attitude Toward Green Product.Respondents who were taken with the provisions ever buy green products and using random sampling. Data were analyzed by using Structural Equation Modeling (SEM).

Recently industries have tried to implement measures geared to GM practices, though; the effort towards green agenda is not straightforward because of the obstacles facing the industries. The presence of these barriers makes the implementation of green issue complex to the industries. So that, the world should develop proper understanding of these barriers to smooth the practices of GM. This paper was aimed to identify critical barriers to GM practices of Ethiopian cement industries. To accomplish this objective; Questionnaires, interviews, and focus group discussions were used. The study found that low enforcement

: Intellectual Management (IM) and Sustainable Development (SD) has been studied to investigate the influence and relationship between them. To reach the purposes, 283 relevant collected data from 30 organizations were utilized for result analysis while a self-administered survey instrument on IM and SD were distributed through simple random sampling technique by selected representatives. A perfect positive relationship between IM & SD and a strong positive influence of IM on SD in the different universities and banking organizations have been found in the findings from the analysis of descriptive and

Benchmarking best practices helps to optimize the output of any organization as the best practices yield consistent desirable outcomes. . The paper focuses on benchmarking best practices in retail channel in biscuit industry. Nagpur is chosen for study considering its central location and ease of accessibility. The research focuses on various practices carried out by the brands of the biscuit industry and understanding if the similar practices are carried out by the competitors and if are result oriented can be considered for benchmarking

Green marketing has gained an important role in the context of global warming and climate change, this, in turn has forced manufacturers to incorporate the principle of green marketing. Green marketing is marketing of products that are presumed to be environmentally safe including product modification, changes to the production process, packaging changes, as well as

Loading Preview

Sorry, preview is currently unavailable. You can download the paper by clicking the button above.

RELATED PAPERS

KOBIA DATA LIMITED

GREEN BUSINESS: CHALLENGES AND PRACTICES

Linas Čekanavičius , Rugilė Bazytė , Agnė Dičmonaitė
Published 2014
Environmental Science, Business

Figures from this paper

Ask This Paper BETA AI-Powered

46 citations, what are the drivers and barriers for green business practice adoption for smes, green business value chain: a systematic review, what is green a case on selected companies, green business, green practices as a path towards the sustainability: evidence from portuguese companies, green business publication: insights from scientometric analysis 1990-2019, the extent green marketing has been embraced in the construction industry - employee perspective in zimbabwe, green marketing orientation and environmental and social performance of hospitality firms in south africa, modeling drivers for successful adoption of green business: an interpretive structural modeling approach, adoption of green jobs in mauritius: drivers and challenges, 18 references, consumer preferences and marketing strategies for “green shares”, green consumer behavior: determinants of curtailment and eco‐innovation adoption.

Highly Influential

The ecolabel and sustainable development

Concerns about green marketing, economic instruments for environmental management: a worldwide compendium of case studies., the green dilemma, green branding effects on attitude: functional versus emotional positioning strategies, social determinants of environmental concern, targeting consumers who are willing to pay more for environmentally friendly products, environmental management in practice, related papers.

Showing 1 through 3 of 0 Related Papers

ORIGINAL RESEARCH article

Green innovation practices and its impacts on environmental and organizational performance.

$\r\nHaijun Wang$

1 School of Management, Jiangsu University, Zhenjiang, China
2 Lahore Business School, University of Lahore, Lahore, Pakistan

This study aims to investigate the impact of stakeholders’ views on the practices of green innovation (GI), consequent effect on environmental and organizational performance (OP), and moderating influence of innovation orientation. A quantitative method was employed for the sample size of 515 responses. To accumulate the data from the respondents, convenient random sampling was used. Data were collected from manufacturing and services firms through a field survey by using a closed-ended questionnaire based in the Punjab province of Pakistan. The analysis was done using the structural equation model of the partial least square analysis method. Our findings proved a positive and significant link between stakeholders’ views on GI practices. A significant association has been found between GI practices and environmental and OP. The moderating effect was found to be negative but statistically significant. This research offers numerous contributions and provides decision-making insinuations.

Introduction

Resource limitations and environmental concerns have made sustainable operations of assets and environmental pollution one of the major global issues. The economy’s overall development may not go “hand in hand” with the reduction of pollution and sustainable management of resources ( Wang and Song, 2014 ). Building a sense of balance among high resource consumption and development of economy relics is a constant challenge that forces organizations to run-through eco-friendly professional deeds having high economic worth ( Chan et al., 2012 ). Many organizations are forced to adopt activities that generate and increase economic value ( Porter and Kramer, 2019 ).

The excessive use of non-renewable resources prompted by speedy economic development has hurt the atmosphere and elevated various environmental worries ( Atlin and Gibson, 2017 ). To preserve energy and lessen emissions of carbon, numerous countries have established agencies and regulations for environmental sustainability and its protections; examples comprise limitations on “chlorofluorocarbons, the sustainable development announcements of the Johannesburg world summit,” and limits on the usage of few hazardous materials “electrical and electronic equipment requirements, the European Union’s Restriction of Hazardous Substances Directive” ( Weng et al., 2015 , p. 4998). Such impositions of rule and regulations have drawn the attention of environmental supervisors ( Zhu and Sarkis, 2004 ; Claver et al., 2007 ); they also have the same outcome in varying the management and competition practices between the organizations ( Feng and Chen, 2018 ). To adhere to the new eco-friendly regulations, to have a positive branding image ( Chen, 2008a ; Hillestad et al., 2010 ), to improve their firms’ performance and to have a competitive advantage ( Claver et al., 2007 ; Rusinko, 2007 ), organizations have had to accept eco-friendly practices ( Afridi et al., 2020 ).

Numerous investigations examined factors altering green innovations (GI) practices, such as environmental regulations, ethics, legal systems, and supply chain ( Feng and Chen, 2018 ; Gao et al., 2018 ; El-Kassar and Singh, 2019 ; Seman et al., 2019 ). Studies have also examined an increase in awareness, the general public, and stakeholder pressure linked to green environmental issues ( Foo, 2018 ). Moreover, literature provides evidence of optimized pressure from society, customers, and government bodies to practice GI. However, the literature lacks findings on the relationship of stakeholders’ pressure [competitor’s pressure, government pressure, and employee conduct (EC)] about GI practices. The manufacturing sector faces higher stakeholder pressure due to possibly the highest waste-producing sector ( Chen, 2008b ; Chang, 2011 ). The single industry was studied for GI practices ( Cordano et al., 2010 ; Lin and Ho, 2011 ). This study fills the gap in investigating these constructs in the manufacturing and service industries to enrich existing GI practices and stakeholder pressure literature. Moreover, stakeholder pressure (customer) was examined for GI in third party logistic firms ( Chu et al., 2019 ), as well as in express companies ( Zhang et al., 2020 ), and in manufacturing firms ( Song et al., 2020 ). Those three studies were conducted in China’s context, which highlights the issue of conducting and focusing on the stakeholder pressure in the manufacturing and service industries of Pakistan being a developing economy in the initial stages of GI practices adoption ( Shahzad M. et al., 2020 ).

“Go-green” is an initiative mainly employed by firms to deal with eco-friendly problems. Approaches to attain green abilities and emerging eco-friendly practices have focused on attention and discussion in the management sciences’ discipline over the years ( Ullah, 2017 ). To ease the acceptance of GI, firms must consider the significant factors and precursors in their business entities ( Arfi et al., 2018 ). These comprise apprehensions of consumers ( Zhu et al., 2017 ), preferences of professionals and owners ( Huang et al., 2009 ), competency of suppliers and partners ( Chiou et al., 2011 ), government regulating authorities and their regulations ( Kammerer, 2009 ), and the environmental, technological, and organizational factors of GI practices ( Lin and Ho, 2011 ). Green technologies consist of GI practices (e.g., green product, process, managerial, and marketing innovation) and the execution of green human resource management practices (e.g., green training and development, administrative support and culture, recruitment and selection, compensation, and benefits). GI is a significant strategic enabler to acquire justifiable development, as it practices energy-saving, environment-protecting, waste-recycling, and pollution-preventing methods ( Albort-Morant et al., 2018 ). Furthermore, GI can be divided into green product, green marketing, green processes, and green management that are intended for eco-friendly environment, decreasing consumption of energy and increasing efficient use of the resource, control over pollution emission, and waste recycling, improving the performance of the organization and providing the pollution-free environment to society at large scale ( Seman et al., 2019 ).

Previous studies have witnessed some proofs of the impacts of numerous drivers such as corporate environmental ethics ( El-Kassar and Singh, 2019 ), environmental regulations ( Feng and Chen, 2018 ), the legal system ( Gao et al., 2018 ), and green supply chain management practices ( Seman et al., 2019 ) on GI practices. To date, some systematic and comprehensive investigations of the precursors and factors of GI have been performed. Foo (2018) proposed that the increase in awareness and pressure from the stakeholders and the general public have necessitated organizations to be more transparent in facing and handling green environmental issues of their supply base execution. Hence, it is critical to focus on stakeholders’ views in an organization on establishing and sustaining GI abilities and practices. Then executives of organizations are involved in examining the essential factors necessary for creating GI practices. Are there pressures from established institutions’ regulations and competitor’s critical factors of GI? How should firms have dealt with the concerns of both internal and external stakeholders?

Furthermore, previous studies have concentrated on the manufacturing sector as it is one of the most critical waste producers that upset the balance of an environment. With rising trepidations on global pollution, this industry is facing increasing pressures from customers, society, and governing agencies to save energy, resources, protect the eco-friendly environment and maintain its sustainability ( Chen, 2008b ; Chang, 2011 ) or on a single industry (e.g., Cordano et al., 2010 ; Lin and Ho, 2011 ). It would be beneficial to offer an all-purpose model to investigate issues about GI for both the service and manufacturing firms. Therefore, in this study, we borrowed help from the “stakeholder theory” ( Freeman, 2010 ) to aid in our investigation methodology. This theory has been utilized to get a comprehensive view of a particular organization to examine stakeholders’ influence (participants) on GI practices. To answer the stakeholders’ pressure, organizations should focus on an overall strategic plan that involves and satisfies both internal and external stakeholder groups ( Bryson, 2018 ).

Review of Literature

Stakeholder view (sv).

The word “stakeholders” was initially used by the “Stanford Research Institute” in 1963 and was defined as “those groups without whose support the organization would cease to exist” ( Friedman and Miles, 2006 ). While this concept was first brought into a “strategic discipline” in 1984 by Freeman (1984) , stakeholders were not only separate from shareholders but also involved in the decision-making process ( Donaldson and Preston, 1995 ; Mitchell et al., 1997 ). In an academic view, the “stakeholder theory” holds a unique perspective for the organizations and offers a diverse description of a firm’s structure and everyday actions ( Sulkowski et al., 2018 ). The stakeholder theory, founded on four indispensable grounds ( Jones and Wicks, 1999 ), first suggests that organizations have associations with several procedures, all of which are upset or pretentious by their results ( Laplume et al., 2008 ; Co and Barro, 2009 ). Second, such links are recognized in the firms’ procedures and results and their stakeholders’ firms’ views.

Third, stakeholders’ inherent value, and comforts cannot be permitted to override the safeties of others ( Clarkson, 1995 ; Co and Barro, 2009 ). Fourth, the decision making of the organizations is the central point ( Alrowwad et al., 2017 ). Stakeholder theory has been accepted for numerous ecological scholarships in that it has been active in persuading both company environmental sensitivity ( Crane and Livesey, 2017 ) and environmental policies ( Salem et al., 2018 ). Although the outcomes have been mixed, and the stakeholders’ views on ecological management have been unpredictable. For example, Jaaffar and Amran (2017) found that the organizations’ board of directors is involved in deciding eco-friendly strategies and policies while small business entities and proprietors decide GI ( Huang et al., 2009 ). In addition, in manufacturing organizations in Germany, stakeholders have affected the firms’ selections concerning ecological response forms ( Murillo-Luna et al., 2008 ), and they were confidently related with unproved GI ( Wagner, 2007 ); in contrast, the association among eco-friendly policies and stakeholders’ administration was not perfect in Belgian organizations ( Buysse and Verbeke, 2003 ). The review paper by Seman et al. (2018) concludes that the stakeholders’ views have a more considerable influence on GI practices.

Green Innovation (GI)

Works of GI are commonly divided into two types. The first describes GI as a firm’s abilities ( Gluch et al., 2009 ), whereas the second defines GI as an organization’s environmental practices ( Lin and Ho, 2008 ; Ho et al., 2009 ). When it comes to organizational practices, GI is described as “the hardware or software innovation related to green products or processes” ( Song and Yu, 2018 ); it is proposed that GI comprises management practices and technological advancements that expand the environmental and organizational performance (OP) and provide a competitive edge to the firms ( Rennings, 2000 ). Other researchers recommend that GI consists of unique or altered systems, processes, products, and practices that provide an advantage to the environment and subsidize firms’ sustainability ( Xie et al., 2019 ).

A recent study expresses GI as “the new or modified products and processes, including technology, managerial, and organizational innovations, which helps to sustain the surrounding environment” ( Ilvitskaya and Prihodko, 2018 ). Moreover, GI may refer to “a creative initiative that reduces negative environmental impacts or that yields environmental benefits as it creates value in the market” ( Chen et al., 2006 ). GI is divided into two kinds, such as “green product innovations” (providing new green products to consumers) and “green process inventions” or “greening” business procedures ( Tang et al., 2018 ). Furthermore, due to the growing customer-centered apprehensions concerning environmental protection, ecological management has become a critical part of many firms’ strategic policies and tactical plans ( Chiou et al., 2011 ; Khan et al., 2019 ).

Regulations related to an environment may lead toward a “win-win situation” ( Chan et al., 2018 ) since they can perform dual tasks, increase profits and lessen pollution; It is proposed that GI should be categorized distinctively from other innovative maneuvers since it harvests not only a spillover consequence for exploration and expansion efforts but also optimistic external possessions such as enlargements in the atmosphere ( Kammerer, 2009 ). A study by Feng et al. (2018) on the Chinese industry’s manufacturing firms has shown that internal and external environmental orientation is significantly associated with GI practices. The utilization of GI practices inside and outside the firms’ restrictions are vital for impacting both economic and ecological performance goals ( Khan and Qianli, 2017 ; Saeed et al., 2018 ). Moreover, Lee et al. (2018) found that stakeholders’ pressure, organizational support, and societal expectations were significant factors for the motivation to adopt GI practices and corporate environmental responsibility ( Shahzad F. et al., 2020 ). Moreover, the study of Fernando et al. (2019) showed that GI, regulation, supplier intervention, and technology have a strong influence on sustainable performance mediated by service innovation capabilities. The study by Famiyeh et al. (2018) also supported eco-friendly practices, showing that environmental management practices have direct and indirect positive effects on environmental performance. Xie et al. (2019) used green product innovation as a moderator for the green process innovation and OP, but the study did not find the supported results.

Proposed Framework and Hypothesis Development

Proposed framework.

This study involves the three dimensions of stakeholders’ view (e.g., competitor pressure, government pressure, and employees conduct) as independent variables. Organizational and environmental performance are used as dependent variables. Moreover, GI practices (e.g., green product and green process) are used as mediators, and the moderating role is performed by innovation orientation (IO). A total of six hypotheses have been suggested and showed in Figure 1 .

Figure 1. Conceptual model of the study.

Hypothesis Development

We followed “Freeman’s stakeholder framework” ( Freeman, 2010 ). We used three stakeholders’ dimensions to view the government’s and competitors’ pressure as external and employees’ conduct as internal stakeholders. However, there are various other dimensions, such as customer, community, and supplier pressure. This study also treats both aspects of stakeholder’s views as factors that are employing pressure on the organizations and motivating the firms to improve environmental practices. Identifying eco-friendly business practices are becoming critical elements as organizations are confronted with “both internal and external forces/pressures from environmental agencies, governmental regulations, stakeholders, competitors, customers and employees” ( Wang and Song, 2014 ). Singh and El-Kassar (2018) conclude that the stakeholders’ view (e.g., pressure by the government, competitors, employees, customers, society, and suppliers, respectively) positively influences the GI practices.

Competitors Pressure (CP)

Organizations generally act in response to the movements of rivals and the operating industry. When competitors accept or implement new eco-friendly practices, organizations in the same sector will feel overstretched to reconfigure the structures and policies ( Durand and Georgallis, 2018 ). In short, organizations need to be attentive to their competitor’s products/services, actions, and norms and regulations of the industry they are part of so that their innovation abilities are similar to others in the industry. For instance, organizations must be conscious of new energy-saving, waste-recycling, pollution-preventing methods, and changes in processes used for the implementation and paraphernalia that are accessible in the market. They are required to have an eye on the methods their competitors have adopted to lessen energy costs while restructuring process and reconfiguring their manufacturing facilities to overtake/perform equivalent to/better than their rivals. Thus, to endure competitive spots, organizations may emulate competitors’ environmental practices and actions, especially the front-runners in their industries ( Abrahamson and Rosenkopf, 1993 ). Singh and El-Kassar (2018) found a positive relationship between stakeholders’ views and GI practices. Furthermore, a study on 442 Chinese firms also confirmed that competitors’ pressure provides organizations with more significant incentives to adopt GI practices ( Cai and Li, 2018 ). In another study ( Yu, 2019 ), the results revealed that formal and informal environmental regulation and pressures have strong influences on food-making companies’ GI activities. Thus, hypothesis 1 is established:

H 1 : Competitor’s pressure has a significant impact on GI practices.

Governmental Pressures (GP)

Various scholarships have explored the association among regulatory rules and environmental practices and have proposed that governmental pressures (GP) is a crucial factor of external stakeholders ( He et al., 2018 ). Variations in regulations and implementation of these changes by the government disturb organizational activities concerning environmental management ( Yakubu, 2017 ). In particular, to compete internationally, organizations must keep an eye on both international and national laws to overcome any obstacle. The consistency of the rules and organizations’ insights into the severity of the regulations will define the degree to which firms essentially execute environmental prevention practices ( Bernauer et al., 2007 ). The appropriate governance mechanisms and structural design can successfully manage and supervise the association between nature and mankind ( Famiyeh et al., 2018 ). Moreover, Tirabeni et al. (2019) showed that organizations are reevaluating their manufacturing processes in response to “societal and governmental” pressures concerned with eco-friendly well-being. Furthermore, the degree to which the government enforces/supports the regulations has a substantial influence on the firms’ environmental strategies ( Lindell and Karagozoglu, 2001 ; Zeng et al., 2011 ), creating a significant task to examine. A study by Zhang et al. (2019) on 224 firms of the manufacturing industry found that institutional pressure significantly affects green supply chain management practices and business performance. In a study by Huang et al. (2016) , results show that customer and regulatory pressure encourage green response and increase performance. A survey by Fernando and Wah (2017) , based on Malaysian firms, concluded that compliance with government regulations impacts environmental performance. Hence, we suggest hypothesis 2:

H 2 : Governmental pressure has a significant impact on GI practices.

Employee Conduct (EC)

Top management identifies the significance of environmental prevention and their responsibility to impact strategic planning and long-term goals related to environmental management. Steady appreciation and consideration of environmental drivers by the management should produce improved innovation and overall performance. Additionally, an organization’s future direction of ecological practices/activities mostly depends on the top management’s commitment toward the utilization of green practices and whether the executives can motivate employees to actively contribute to environmental management ( Tang et al., 2018 ). The same circumstances exist between employees. In a business, workforces are often the originators of environmental practices ( Daily and Huang, 2001 ). Organizations will strain to achieve ecological goals if the personnel/workforce do not contribute to their policies and strategies ( Zhu et al., 2008 ). Thus, firms must arrange and offer workshops and training on environmental concerns, include suitable employees, and improve their obligation to eco-friendly practices ( Reinhardt, 1999 ). Yen and Yen (2012) investigate the inside drivers motivating organizations to utilize green activities such as the top management commitment and relationships with vendors. The authors found a direct association between the proposed constructs of the study.

Furthermore, Gholami et al. (2013) examined senior managers’ perceptions about situations and the significances of using green practices. They presented that green technology acceptance, top management attitude, and apprehension for potential concerns are significantly interrelated. Moreover, they found an optimistic connection between the adoption of green practices and overall performance. The results from Cao and Chen (2018) study show that when the top management’s awareness increases, the association between coercive policies and GI strategy becomes stronger. Soewarno et al. (2019) propose that executives are responsible for making GI strategies that have to be implemented by employees. Such innovation strategies positively influence GI if applied appropriately. Thus, we propose hypothesis 3:

H 3 : EC has a significant impact on GI practices.

Environmental Performance

In this study, we have assessed the firms’ overall performance into two types: environmental and organizational. Environmental performance (EP) can be defined as “the environmental impact of a company’s activities on the natural surroundings” ( Klassen and Whybark, 1999 ). OP includes numerous elements, both financial and non-financial (e.g., market share, reputation, sales volume, stakeholders satisfaction, etc.) ( Venkatraman and Ramanujam, 1986 ).

Environmental performance encompasses the inclusion of eco-friendly ingredients in products, less pollution, reduced carbon emissions and waste at the source, advancements in energy-savings, efficiency in utilization of resources, reduction in the use of environmentally hazardous elements, etc. ( Zhu et al., 2010 ). Related to long-term ecological impacts, an organization’s regulatory methods, processes, practices including pollution protection, as well as resource utilization and waste lessening, are more fruitful than “end-of-pipeline solutions” ( Sarkis and Cordeiro, 2001 ; De Giovanni, 2012 ; Khan et al., 2019 ). Previous scholarships proposed that advancement in the production process and efficiency will upsurge opportunities to advance environmental performance ( Montabon et al., 2007 ). Along with these, a study by Seman et al. (2019) on the 123-manufacturing industry showed that GI practices significantly improve environmental performance. Hence, we established hypothesis 4:

H 4 : GI practices have a significant impact on environmental performance.

Organizational Performance

Organizational performance can be assessed both “financially and non-financially” ( Gounaris et al., 2003 ). To control environmental costs, organizations raise their productivity by adopting GI practices ( de Burgos-Jiménez et al., 2013 ). Similarly, organizations can establish new markets and upsurge their market share by employing and adopting environmental activities and practices ( Berry and Rondinelli, 1998 ; Berrone et al., 2017 ). A long-term organization goal, advancement into non-monetary performance can be demonstrated by enlarged customer loyalty, newly joined customers, and an improved image and reputation of an organization ( Blazevic and Lievens, 2004 ). Chen (2008a) suggested that innovators in GI will gain the “first-mover advantage,” which indicates an improved firm image, higher product prices, competitive advantages, and new market opportunities. A study by Tang et al. (2018) shows that GI practices have positive effects on OP. Moreover, a study by Zhang and Walton (2017) on 83 New Zealand firms concludes that GI has a positive influence on the firms’ performance. Thus, hypothesis 5 is constructed:

Hypothesis 5: GI practices have a significant impact on OP.

This study used IO as a moderator. It tested its effect on the association among EC and GI practices because the variable is allied with organizations’ policy settings and culture, which primarily correlate to the firm’s employees.

Innovation Orientation

Innovation orientation is a strategic orientation that disturbs firms’ innovation practices and functions as a guiding standard for making strategy and enactment to increase an organization’s innovativeness ( Chen et al., 2011 ; Stock and Zacharias, 2011 ). It defines a firms’ “openness to new ideas, technologies, skills, resources, and administrative systems” ( Zhou et al., 2005 ) and a knowledge-sharing system that unites a learning viewpoint, strategic guidelines, and trans -functional acclimation within a firm to encourage innovation ( Siguaw et al., 2006 ). IO is a crucial factor in overwhelming competitors and advancing an organization’s capability to effectively execute new products, services, systems, and processes ( Oke, 2007 ). Organizations with a new innovative environment and management will motivate and encourage employees to commence innovative conduct ( Ramus, 2018 ). Thus, we assume that an IO can advance the association between EC and GI practices, as exemplified in hypothesis 6:

H 6 : IO significantly moderates EC on GI practices.

Research Methodology

Based on a review of the literature, we considered a structured closed-ended questionnaire with 7 s. The first section includes the demographical information of respondents. The second to seventh sections include the measurement items related to specific construct’s competitors’ pressure, governmental pressure; EC; IO; GI practices; environmental performance, and OP. To ensure the validity of the questionnaire and data, two pilot studies were conducted. After that step, we adopted a field survey on a large scale. All of the construct’s items were measured using “five-point Likert-type scales in which 1 = strongly disagree, 5 = strongly agree.”

Data Collection and Sample

Data were collected from January 2019 to July 2019 from the manufacturing and services firms of Punjab province in Pakistan that have adopted GI practices. Convenient random sampling techniques were adopted for selecting areas of the country. Most of the organizations are based in Lahore, Faisalabad, Sheikhupura, Gujranwala, and Multan. Data collected by field surveys targeted the population, including the executives of different departments such as marketing, human resource, productions, operations, and other functional managers. After the pilot study’s conduction, 550 questionnaires were distributed among the respondents, out of which 520 were filled and returned. This resulted in a response rate of 94.54% from a random sampling method for data collection. Five forms were removed from the analysis due to incomplete information, and the remaining 515 were used in the analysis.

Measures of the Constructs

This study adopted a quantitative research technique and a closed-ended questionnaire used for data collection. All of the variables were assessed with multiple-item scales. In total, 46 question items, mainly related to the constructs, were used. Competitor pressure was appraised by acclimating four items from preceding studies ( Christmann, 2004 ). GP were measured by four items scale adapted from the studies of Zeng et al. (2011) and Qi et al. (2010) . EC was measured by four items scale taken from Lindell and Karagozoglu (2001) studies and López-Gamero et al. (2008) . IO was measured by seven items scale gained from the studies of Hurley and Hult (1998) ; Zhou et al. (2005) , and Siguaw et al. (2006) . In this study, GI practices were measured by nine items scale taken from the study of Chiou et al. (2011) . OP measured by eight items scale adapted from the study of Blazevic and Lievens (2004) and Avlonitis et al. (2001) . Moreover, the environmental performance was measured by six items scale adapted from Lin (2013) studies.

Common Method Bias

We used Harman’s single factor test to check the issue of common method bias in the data. As per Harman’s methodology, if all the factors merged into factor analysis, and the first factor explains more than 50% of the data variance, there is an issue of common method bias. Therefore, we used the dimension reduction method in SPSS and merged all the factors into one factor using a rotation matrix. The first factor’s results explained 38.23% of the total variance, which is less than 50% of the variance. Thus, common method bias is not considered as the problem in this study.

Data Analysis and Results

This study used the partial least squares (PLS) procedure of structural equation modeling using Smart-PLS Version 3.0 to assess the research model. This procedure was designated due to the investigative nature of the study ( Hair et al., 2011 ). As recommended by Hair et al. (2013) , this research applied a two-step method for statistical analysis. In the first step, the measurement model was analyzed. In the second step, the structural relationships among the latent constructs were assessed. This tactic was used to conclude both the reliability and validity of the theoretical variables before the model’s structural relationship was tested. Furthermore, Smart-PLS’s main reason includes the extensive popularity and acceptability of its application ( Hair et al., 2012 ). It also includes comprehensive information about the variables ( Hair et al., 2011 ).

Sample Demographics

A sample of 515 employees represents the telecommunication sector population in China, and demographical representation was shown in Table 1 . 392 (76.1%) respondents are male, and the rest, 123 (23.9%) respondents are female. Also, 246 (47.8%) respondents fall in the range of 31–40 years, followed by 219 (42.5%) in 20–30 years. From the education perspective, 291 (56.5%) respondents have a master’s degree, followed by 216 (41.9%) with a graduation degree, and the remaining (1.6%) with higher than master degree education, respectively. Furthermore, 218 (42.3%) respondents have a job in the sales and marketing department, 209 (40.6%) selected “other options,” apart from the HR and finance department. As for work experience, 260 (50.5%) respondents have 5–10 years of experience, followed by 127 (24.7%) with 1–5 years and the rest (24.3%) with 11–15 years of experience, respectively. As mentioned in the table below, 168 (32.6%) respondents have a monthly income of more than 60,000 rupees. Out of 515 respondents, 333 (64.7%) are married, and the rest, 182 (35.3%), are single.

Table 1. Demographical information.

Measurement of Model

The partial least square method was used to measure the reliability and validity of the respective constructs. The constructs’ internal reliability was evaluated by “Cronbach’s Alpha (CA), and Composite reliability.” According to Gefen et al. (2000) and Hair et al. (2013) , CA should be greater than 0.7. Moreover, Hinton (2014) categorized four ranges of CA. First, if the value falls in the range of 0.9, it falls in the area of excellent reliability. Second, if it falls between 0.7 and 0.9, it will have high reliability. Third, if it is in the range of 0.5 to 0.7, it will fall into the moderate area. Fourth, if it is <0.5, it will be categorized as low. Table 2 shows that all of the variables have values (e.g., CP = 0.851; GP = 0.829; EC = 0.851; IO = 0.764; GIP = 0.829; EP = 0.799; and OP = 0.892) which fall into the range of high reliability. Furthermore, to evaluate the convergent validity, the average variance extracted (AVE) is used. Fornell and Larcker (1981) and Bagozzi and Yi (1988) propose that AVE’s value should be greater than 0.5. As per results found in the table, all the values of constructs (0.691; 0.654; 0.627; 0.585; 0.598; 0.651; and 0.650) satisfied the rule of thumb. Chin (1998) recommended that loadings have a value greater than 0.5 because it indicates the constructs’ reliability. The item’s value can be between 0.4 and 0.7, as the value is also used by Umrani et al. (2018) . Hence, all the loading values are found in the range of 0.477 to 0.894. Hence, it is proved that all the values satisfied the rule of thumb established by the scholars.

Table 2. Measurement model.

Two methods were used to evaluate the discriminant validity (e.g., used to measure either construct used in the study well defined). Each construct is pure and not any multicollinearity involved. The dependent variable was evaluated by considering the correlations between the measures of hypothetically intersecting variables) of the variables. First, it was ensured that the cross-loadings of indicators should be greater than any other opposing constructs ( Hair et al., 2012 ). Second, according to the criterion of Anderson and Gerbing (1988) and Fornell and Larcker (1981) , the “square root of AVE for each construct should exceed the inter-correlations of the construct with other model constructs” ( Table 3 ). Hence, both methods ensured the satisfaction of the results and validity. All the results found in the study meet satisfactory status.

Table 3. Discriminant validity coefficients.

Another essential technique of partial least square to assess the model’s validity and multicollinearity includes the Heterotrait–Monotrait ratio. According to Henseler et al. (2015) . HTMT is the ratio of trait correlation to within correlation. The belief that if the HTMT value is going to increase >0.9, it will lack the discriminant validity, as mentioned in Table 4 . Furthermore, it is considered one of the most crucial technique to measure the multicollinearity.

Table 4. Heterotrait – Monotrait (HTMT) ratio.

Structural Model

The table given below contains the values of the coefficient of determination. It shows the percentage change in the dependent variable incurred because of independent variables. Hair et al. (2010) defined it as the proportion determined by independent variables. In other words, it tells how much change in dependent variable incurs because of the independent variable. Table 5 shows three models. In the path – 1: R 2 of GI practice, have a positive coefficient 0.716, and adjusted R 2 0.713. It entails that 71.6% of changes in GIP incur because of all the independent variables. Path – 2 exhibited a 31.7% change in EP. While path – 3 showed a 31.6% change in OP incurred because of all the independent variables. According to Hair et al. (2011) and Henseler et al. (2015) , three values of the coefficient of determination, 0.75, 0.5, or 0.25, which are called substantial, moderate, or weak, respectively. If the co-efficient of determination falls within the range of 0.75 or greater, it will become significant. If it is between 0.25 and 0.75, it will become moderate. If it falls below 0.25, it will be considered weak. Hence, the study’s value, which is shown in the table underneath, falls in a moderate range.

Table 5. Analysis of R 2 .

Analysis and Discussion

The competitors’ pressure, governmental pressure, EC, and GI practices are concentrated on environmental and OP. The manufacturing and servicing industries of the country were examined, which account for greater than 70% contribution to the GDP of the country. A cohesive framework was developed under the investigation of theory, and it stated that the stakeholders’ dimensions have positive and significant effects on the GI practice, and which, in turn, has positive and significant impacts on environmental and OP.

In the study, six hypotheses were constructed. Among them, five were a direct hypothesis, and one was proposed for the moderation effect. As exhibited in Table 6 and Figure 2 , the first direct hypothesis H 1 related to the influence of competitor pressure on GI practices. The findings show that competitive pressure positively and significantly impacts GI practices with a coefficient value of 0.271, t -value 5.543 > 2, and p -value 0.000 < 0.05. The hypothesis results were found consistent with the study of El-Kassar and Singh (2019) . Moreover, we tested H 2 governmental pressure positively related to GI practices. The results indicate that governmental pressure positively and significantly impacts GI practices with a positive coefficient value of 0.123, t -value 4.598 > 2, and p -value 0.000 < 0.05. The second direct hypothesis H 2 , won the vote of support and was consistent with the results from a previous study of Sezen and Çankaya (2013) and Fernando and Wah (2017) . Our third hypothesis, H3, is associated with EC and GI practices. The output illustrates that EC positively influenced GI practices with coefficient value of 0.185, t -value 4.368 > 2, and p -value 0.000 < 0.05. Hypothesis results were found consistent with the study of Yen and Yen (2012) , Gholami et al. (2013) , and Soewarno et al. (2019) .

Table 6. Path coefficients and hypothesis testing.

Figure 2. Structural model of the study.

Furthermore, we discussed the H 4 the direct effect of GI practices on OP. The findings show that GI practices positively and significantly affect OP with a positive coefficient value of 0.563, t -value 14.653 > 2, and p -value 0.000 < 0.05. Hypothesis results were consistent with the previous study of Seman et al. (2019) . Besides, we tested the direct effect of GI practices on environmental performance. We found that GI practices positively related to environmental performance with a positive coefficient of 0.562, t -value 16.15 > 2, and p -value 0.000 < 0.05. The hypothesis was supported and consistent with the studies of Zhang and Walton (2017) and Tang et al. (2018) . Finally, the sixth hypothesis H 6 was constructed for moderation interaction effects, and its results were found statistically significant with a negative coefficient value of −0.063, t -value 3.137 > 2, and p -value 0.000 < 0.05. In conclusion, the results of all direct hypotheses were found with a positive path coefficient and statistically significant with a t -value > 2 and p -value < 0.05 and the interaction graph presented in Figure 3 . However, the moderation hypothesis was found statistically significant, with a negative coefficient value. Therefore, it is proven that all the variables used in the study affect GI practices and the firms’ overall performance.

Figure 3. Interaction graph EC × IO and GIP.

Conclusion and Implications

“Go green” has been forcing internationally dynamic organizations to improve their green competencies endlessly, execute GI practices to prevent the environment from degrading further, and advance overall firms’ performance. Therefore, this study aims to identify the key factors affecting on the GI practices and its impact on OP from stakeholders’ perspectives. From the results, it is concluded that competitive pressure has a positive and significant impact on GI practices ( Abrahamson and Rosenkopf, 1993 ; Cai and Li, 2018 ; Durand and Georgallis, 2018 ; Singh and El-Kassar, 2018 ; Yu, 2019 ) as well as that governmental pressure has a positive and significant impact on GI practices ( Lindell and Karagozoglu, 2001 ; Bernauer et al., 2007 ; Zeng et al., 2011 ; Huang et al., 2016 ; Fernando and Wah, 2017 ; Yakubu, 2017 ; Famiyeh et al., 2018 ; He et al., 2018 ; Tirabeni et al., 2019 ; Zhang et al., 2019 ). Furthermore, it can be seen from our results that employee’s conduct is positively influenced by GI practices ( Reinhardt, 1999 ; Daily and Huang, 2001 ; Zhu et al., 2008 ; Yen and Yen, 2012 ; Gholami et al., 2013 ; Cao and Chen, 2018 ; Tang et al., 2018 ; Soewarno et al., 2019 ). Also, our results conclude that GI practices have a positive and significant effect on OP ( Berry and Rondinelli, 1998 ; Gounaris et al., 2003 ; Blazevic and Lievens, 2004 ; Chen, 2008a ; de Burgos-Jiménez et al., 2013 ; Berrone et al., 2017 ; Zhang and Walton, 2017 ; Tang et al., 2018 ). The findings of the study suggest that GI practices positively related to environmental performance. From the findings, it is also concluded that the moderation effect of IO was found statistically significant but with a negative coefficient value. The study also describes significant implications and suggestions to the managers and policymakers.

Implications

The present study delivers numerous researches “contributions and managerial implications.” First, this study presented that GI practices disturb not only EP but also OP. GI should be seen not only as responsive contentment of management requirements but as a pre-emptive exercise to advance a competitive advantage and the firm’s performance ( de Burgos-Jiménez et al., 2013 ). This pragmatic sign proposes that when organizations generously emphasize GI practices, they can promote both “financial and non-financial” performance. Top management executives can play a crucial role in carrying the significance of GI to all stakeholders. Second, both industrial and service organizations were investigated in the model. The data collected from both the sectors/industries showed no difference, and the results were the same. “Go green” is a significant issue for both divisions. GI practices need to be endlessly accepted in the product, process, marketing, management innovation, or all, regardless of industry. Finally, this study showed a statistically significant moderation effect of IO on EC concerning GI practices. However, we propose that the top management or executives accentuate innovation and inventiveness in their firm’s culture. The effort to raise the constituents of innovation is critical to the existence and sustainability of firms.

Limitations and Further Research

Although this research study delivers valuable intuitions, some limitations should fuel further investigations. First, the study was conducted in Pakistan, which only included significant areas of the country; small cities were ignored in the research. Second, an executive’s insights into GI practices and consequences are stranded in specific-industry norms. However, to focus on the conclusions’ larger generalizability, we invite scholars to replicate our study but in diverse perspectives and countries. Future studies should include other dimensions of the stakeholders’ view with the mediation of market innovation and management innovation. HR practices can also moderate the relationship between stakeholders’ views and GI practices. Last, the mediation effects need to be explored further.

Data Availability Statement

The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.

Ethics Statement

This study was carried out in accordance with the recommendations of the Ethical Principles of Psychologists and Code of Conduct of the American Psychological Association (APA). All participants gave written consent in accordance with the Declaration of Helsinki. The studies involving human participants were reviewed and approved by the Ethics Committee of the Lahore School of Business, University of Lahore, Pakistan. The patients/participants provided their written informed consent to participate in this study.

Author Contributions

MK, HW, and DA: the provision of materials (i.e., questionnaires) and principal manuscript writing. MM, FS, and FA: data collection and manuscript revision and proofreading. MK and HW: data analysis plan. FS and FA: data analysis. All authors contributed to definition of research objectives, models, and hypotheses and approved the final version of the manuscript.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Abrahamson, E., and Rosenkopf, L. (1993). Institutional and competitive bandwagons: using mathematical modeling as a tool to explore innovation diffusion. Acad. Manage. Rev. 18, 487–517. doi: 10.5465/amr.1993.9309035148

CrossRef Full Text | Google Scholar

Afridi, S. A., Afsar, B., Shahjehan, A., Khan, W., Rehman, Z. U., and Khan, M. A. S. (2020). Impact of corporate social responsibility attributions on employee’s extra role behaviors: moderating role of ethical corporate identity and interpersonal trust. Corpor. Soc. Responsib. Environ. Manage. 2020, 1–14.

Google Scholar

Albort-Morant, G., Leal-Millán, A., Cepeda-Carrion, G., and Henseler, J. (2018). Developing green innovation performance by fostering of organizational knowledge and coopetitive relations. Rev. Manage. Sci. 12, 499–517. doi: 10.1007/s11846-017-0270-z

Alrowwad, A. A., Obeidat, B. Y., Tarhini, A., and Aqqad, N. (2017). The impact of transformational leadership on organizational performance via the mediating role of corporate social responsibility: a structural equation modeling approach. Int. Bus. Res. 10, 199–221. doi: 10.5539/ibr.v10n1p199

Anderson, J. C., and Gerbing, D. W. (1988). Structural equation modeling in practice: a review and recommended two-step approach. Psychol. Bulletin 103:411. doi: 10.1037/0033-2909.103.3.411

Arfi, W. B., Hikkerova, L., and Sahut, J.-M. (2018). External knowledge sources, green innovation and performance. Technol. Forecasting Soc. Change 129, 210–220. doi: 10.1016/j.techfore.2017.09.017

Atlin, C., and Gibson, R. (2017). Lasting regional gains from non-renewable resource extraction: the role of sustainability-based cumulative effects assessment and regional planning for mining development in canada. Extr. Ind. Soc. 4, 36–52. doi: 10.1016/j.exis.2017.01.005

Avlonitis, G. J., Papastathopoulou, P. G., and Gounaris, S. P. (2001). An empirically-based typology of product innovativeness for new financial services: Success and failure scenarios. J. Prod. Innovation Manage. 18, 324–342. doi: 10.1111/1540-5885.1850324

Bagozzi, R. P., and Yi, Y. (1988). On the evaluation of structural equation models. J. Acad. Marketing Sci. 16, 74–94.

Bernauer, T., Engel, S., Kammerer, D., and Sejas Nogareda, J. (2007). Explaining green innovation: ten years after Porter’s win-win proposition: how to study the effects of regulation on corporate environmental innovation? Politisc. Vierteljahresschrift 39, 323–341.

Berrone, P., Fosfuri, A., and Gelabert, L. (2017). Does greenwashing pay off? Understanding the relationship between environmental actions and environmental legitimacy. J. Bus. Ethics 144, 363–379. doi: 10.1007/s10551-015-2816-9

Berry, M. A., and Rondinelli, D. A. (1998). Proactive corporate environmental management: A new industrial revolution. Acad. Manage. Perspect. 12, 38–50. doi: 10.5465/ame.1998.650515

Blazevic, V., and Lievens, A. (2004). Learning during the new financial service innovation process: antecedents and performance effects. J. Bus. Res. 57, 374–391. doi: 10.1016/s0148-2963(02)00272-2

Bryson, J. M. (2018). Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. Hoboken, NJ: John Wiley & Sons.

Buysse, K., and Verbeke, A. (2003). Proactive environmental strategies: a stakeholder management perspective. Strategic Manage. J. 24, 453–470. doi: 10.1002/smj.299

Cai, W., and Li, G. (2018). The drivers of eco-innovation and its impact on performance: evidence from China. J. Cleaner Prod. 176, 110–118. doi: 10.1016/j.jclepro.2017.12.109

Cao, H., and Chen, Z. (2018). The driving effect of internal and external environment on green innovation strategy-The moderating role of top management’s environmental awareness. Nankai Bus. Rev. Int. 10, 342–361. doi: 10.1108/nbri-05-2018-0028

Chan, H. K., He, H., and Wang, W. Y. (2012). Green marketing and its impact on supply chain management in industrial markets. Ind. Marketing Manage. 41, 557–562. doi: 10.1016/j.indmarman.2012.04.002

Chan, H.-L., Shen, B., and Cai, Y. (2018). Quick response strategy with cleaner technology in a supply chain: coordination and win-win situation analysis. Int. J. Prod. Res. 56, 3397–3408. doi: 10.1080/00207543.2016.1278283

Chang, C.-H. (2011). The influence of corporate environmental ethics on competitive advantage: the mediation role of green innovation. J. Bus. Ethics 104, 361–370. doi: 10.1007/s10551-011-0914-x

Chen, J.-S., Tsou, H.-T., and Ching, R. K. (2011). Co-production and its effects on service innovation. Ind. Marketing Manage. 40, 1331–1346. doi: 10.1016/j.indmarman.2011.03.001

Chen, Y.-S. (2008a). The driver of green innovation and green image–green core competence. J. Bus. Ethics 81, 531–543. doi: 10.1007/s10551-007-9522-1

Chen, Y.-S. (2008b). The positive effect of green intellectual capital on competitive advantages of firms. J. Bus. Ethics 77, 271–286. doi: 10.1007/s10551-006-9349-1

Chen, Y.-S., Lai, S.-B., and Wen, C.-T. (2006). The influence of green innovation performance on corporate advantage in Taiwan. J. Bus. Ethics 67, 331–339. doi: 10.1007/s10551-006-9025-5

Chin, W. W. (1998). The partial least squares approach to structural equation modeling. Mod. Methods Bus. Res. 295, 295–336.

Chiou, T.-Y., Chan, H. K., Lettice, F., and Chung, S. H. (2011). The influence of greening the suppliers and green innovation on environmental performance and competitive advantage in taiwan. Transp. Res. Part E Logist. Transp. Rev. 47, 822–836. doi: 10.1016/j.tre.2011.05.016

Christmann, P. (2004). Multinational companies and the natural environment: determinants of global environmental policy. Acad. Manage. J. 47, 747–760. doi: 10.5465/20159616

Chu, Z., Wang, L., and Lai, F. (2019). Customer pressure and green innovations at third party logistics providers in china. Int. J. Logist. Manage. 30, 57–75. doi: 10.1108/ijlm-11-2017-0294

Clarkson, M. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Acad. Manage. Rev. 20, 92–117. doi: 10.5465/amr.1995.9503271994

Claver, E., Lopez, M. D., Molina, J. F., and Tarí, J. J. (2007). Environmental management and firm performance: a case study. J. Environ. Manage. 84, 606–619. doi: 10.1016/j.jenvman.2006.09.012

PubMed Abstract | CrossRef Full Text | Google Scholar

Co, H., and Barro, F. (2009). Stakeholder theory and dynamics in supply chain collaboration. Int. J. Oper. Prod. Manage. 29, 591–611. doi: 10.1108/01443570910957573

Cordano, M., Marshall, R. S., and Silverman, M. (2010). How do small and medium enterprises go “green”? A study of environmental management programs in the US wine industry. J. Bus. Ethics 92, 463–478. doi: 10.1007/s10551-009-0168-z

Crane, A., and Livesey, S. (2017). “Are you talking to me?: stakeholder communication and the risks and rewards of dialogue,” in Unfolding stakeholder thinking 2 , eds J. Andriof, S. Waddock, B. Husted, and S. S. Rahman (New York, NY: Routledge), 39–52. doi: 10.9774/gleaf.978-1-909493-32-2_4

Daily, B. F., and Huang, S.-C. (2001). Achieving sustainability through attention to human resource factors in environmental management. Int. J. Oper. Prod. Manage. 21, 1539–1552. doi: 10.1108/01443570110410892

de Burgos-Jiménez, J., Vázquez-Brust, D., Plaza-Úbeda, J. A., and Dijkshoorn, J. (2013). Environmental protection and financial performance: an empirical analysis in wales. Int. J. Oper. Prod. Manage. 33, 981–1018. doi: 10.1108/ijopm-11-2010-0374

De Giovanni, P. (2012). Do internal and external environmental management contribute to the triple bottom line? Int. J. Oper. Prod. Manage. 32, 265–290. doi: 10.1108/01443571211212574

Donaldson, T., and Preston, L. E. (1995). The stakeholder theory of the corporation: concepts, evidence, and implications. Acad. Manage. Rev. 20, 65–91. doi: 10.2307/258887

Durand, R., and Georgallis, P. (2018). Differential firm commitment to industries supported by social movement organizations. Organ. Sci. 29, 154–171. doi: 10.1287/orsc.2017.1170

El-Kassar, A.-N., and Singh, S. K. (2019). Green innovation and organizational performance: the influence of big data and the moderating role of management commitment and HR practices. Technol. Forecast. Social Change 144, 483–498. doi: 10.1016/j.techfore.2017.12.016

Famiyeh, S., Adaku, E., Amoako-Gyampah, K., Asante-Darko, D., and Amoatey, C. T. (2018). Environmental management practices, operational competitiveness and environmental performance: empirical evidence from a developing country. J. Manuf. Technol. Manage. 29, 588–607. doi: 10.1108/jmtm-06-2017-0124

Feng, L., Zhao, W., Li, H., and Song, Y. (2018). The effect of environmental orientation on green innovation: do political ties matter? Sustainability 10:4674. doi: 10.3390/su10124674

Feng, Z., and Chen, W. (2018). Environmental regulation, green innovation, and industrial green development: an empirical analysis based on the spatial durbin model. Sustainability 10:223. doi: 10.3390/su10010223

Fernando, Y., Jabbour, C. J. C., and Wah, W.-X. (2019). Pursuing green growth in technology firms through the connections between environmental innovation and sustainable business performance: Does service capability matter? Resour. Conserv. Recyl. 141, 8–20. doi: 10.1016/j.resconrec.2018.09.031

Fernando, Y., and Wah, W. X. (2017). The impact of eco-innovation drivers on environmental performance: empirical results from the green technology sector in malaysia. Sustainable Prod. Consumption 12, 27–43. doi: 10.1016/j.spc.2017.05.002

Foo, M. Y. (2018). Green purchasing capabilities and practices towards triple bottom line performance: Moderating effects of institutional pressure/. Foo Meow Yee. Phd Thesis. Kuala Lumpur: University of Malaya.

Fornell, C., and Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. J. Marketing Res. 18, 39–50. doi: 10.2307/3151312

Freeman, E. (1984). Strategic Management. A Stakeholder Approach. Stakehold. Manag. Framew. Phil. 2, 267–299.

Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge: Cambridge university press.

Friedman, A. L., and Miles, S. (2006). Stakeholders: Theory and practice. Oxford: Oxford University Press.

Gao, Y., Tsai, S.-B., Xue, X., Ren, T., Du, X., Chen, Q., et al. (2018). An empirical study on green innovation efficiency in the green institutional environment. Sustainability 10:724. doi: 10.3390/su10030724

Gefen, D., Straub, D., and Boudreau, M.-C. (2000). Structural equation modeling and regression: Guidelines for research practice. Comm. Assoc. Info. Sys. 4:7.

Gholami, R., Sulaiman, A. B., Ramayah, T., and Molla, A. (2013). Senior managers’ perception on green information systems (IS) adoption and environmental performance: results from a field survey. Inf. Manag. 50, 431–438. doi: 10.1016/j.im.2013.01.004

Gluch, P., Gustafsson, M., and Thuvander, L. (2009). An absorptive capacity model for green innovation and performance in the construction industry. Constr. Manage. Eco. 27, 451–464. doi: 10.1080/01446190902896645

Gounaris, S. P., Papastathopoulou, P. G., and Avlonitis, G. J. (2003). Assessing the importance of the development activities for successful new services: does innovativeness matter? Int. J. Bank Marketing 21, 266–279. doi: 10.1108/02652320310488448

Hair, J. F., Anderson, R. E., Babin, B. J., and Black, W. C. (2010). Multivariate data analysis: A global perspective (Vol. 7). In. Upper Saddle River, NJ: Pearson.

Hair, J. F., Ringle, C. M., and Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. J. Marketing Theory Prac. 19, 139–152. doi: 10.2753/mtp1069-6679190202

Hair, J. F., Ringle, C. M., and Sarstedt, M. (2013). Partial least squares structural equation modeling: rigorous applications, better results and higher acceptance. Long Range plan. 46, 1–12. doi: 10.1016/j.lrp.2013.01.001

Hair, J. F., Sarstedt, M., Pieper, T. M., and Ringle, C. M. (2012). The use of partial least squares structural equation modeling in strategic management research: a review of past practices and recommendations for future applications. Long Range plan. 45, 320–340. doi: 10.1016/j.lrp.2012.09.008

He, Z.-X., Shen, W.-X., Li, Q.-B., Xu, S.-C., Zhao, B., Long, R.-Y., et al. (2018). Investigating external and internal pressures on corporate environmental behavior in papermaking enterprises of China. J. Clean.Prod. 172, 1193–1211. doi: 10.1016/j.jclepro.2017.10.115

Henseler, J., Ringle, C. M., and Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. J. Acad. Market. Sci. 43, 115–135. doi: 10.1007/s11747-014-0403-8

Hillestad, T., Xie, C., and Haugland, S. A. (2010). Innovative corporate social responsibility: the founder’s role in creating a trustworthy corporate brand through “green innovation”. J. Prod. Brand Manage. 19, 440–451. doi: 10.1108/10610421011085758

Hinton, P. R. (2014). Statistics explained. Abingdon: Routledge.

Ho, Y.-H., Lin, C.-Y., and Chiang, S.-H. (2009). Organizational determinants of green innovation implementation in the logistics industry. Int. J. Organ. Innov. 2, 3.

Huang, X.-x, Hu, Z.-p., Liu, C.-s., Yu, D.-j., and Yu, L.-f. (2016). The relationships between regulatory and customer pressure, green organizational responses, and green innovation performance. J. Cleaner Prod. 112, 3423–3433. doi: 10.1016/j.jclepro.2015.10.106

Huang, Y.-C., Ding, H.-B., and Kao, M.-R. (2009). Salient stakeholder voices: family business and green innovation adoption. J. Manage.Organ. 15, 309–326. doi: 10.5172/jmo.2009.15.3.309

Hurley, R. F., and Hult, G. T. M. (1998). Innovation, market orientation, and organizational learning: an integration and empirical examination. J. Marketing 62, 42–54. doi: 10.1177/002224299806200303

Ilvitskaya, S., and Prihodko, V. (2018). Innovative technologies in the field of topography, land management, territorial planning, construction and architecture. IOP Conf. Ser. Mater. Sci. Eng. 365:022030. doi: 10.1088/1757-899x/365/2/022030

Jaaffar, A. H., and Amran, A. A. (2017). The influence of leaders’ past environmental-related experiences and positive deviance behaviour in green management practices. J. Pengurusan 51, 1–18.

Jones, T. M., and Wicks, A. C. (1999). Convergent stakeholder theory. Acad.Manage. Rev. 24, 206–221. doi: 10.2307/259075

Kammerer, D. (2009). The effects of customer benefit and regulation on environmental product innovation.: empirical evidence from appliance manufacturers in germany. Ecol. Eco. 68, 2285–2295. doi: 10.1016/j.ecolecon.2009.02.016

Khan, M. A. S., Ali, M., Usman, M., Saleem, S., and Jianguo, D. (2019). Interrelationships between ethical leadership, green psychological climate, and organizational environmental citizenship behavior: the moderating role of gender. Front. Psychol. 10:1977. doi: 10.3389/fpsyg.2019.01977

Khan, M. A. S., Jianguo, D., Saleem, S., Boamah, K. B., Javed, U., and Usman, M. (2019). Rejuvenating the concept of work alienation through job demands-resources model and examining its relationship with emotional exhaustion and explorative and exploitative learning. Psychol. Res Behav. Manage. 12, 931. doi: 10.2147/prbm.s204193

Khan, S. A. R., and Qianli, D. (2017). Impact of green supply chain management practices on firms’ performance: an empirical study from the perspective of Pakistan. Environ. Sci. Pollu. Res. 24, 16829–16844. doi: 10.1007/s11356-017-9172-5

Klassen, R. D., and Whybark, D. C. (1999). The impact of environmental technologies on manufacturing performance. Acad. Manage. J. 42, 599–615. doi: 10.5465/256982

Laplume, A. O., Sonpar, K., and Litz, R. A. (2008). Stakeholder theory: reviewing a theory that moves us. J. Manage. 34, 1152–1189. doi: 10.1177/0149206308324322

Lee, J. W., Kim, Y. M., and Kim, Y. E. (2018). Antecedents of adopting corporate environmental responsibility and green practices. J. Bus. Ethics 148, 397–409. doi: 10.1007/s10551-016-3024-y

Lin, C.-Y., and Ho, Y.-H. (2008). An empirical study on logistics service providers’ intention to adopt green innovations. J. Technol. Manage.Innov. 3, 17–26.

Lin, C.-Y., and Ho, Y.-H. (2011). Determinants of green practice adoption for logistics companies in China. J. Bus. Ethics 98, 67–83. doi: 10.1007/s10551-010-0535-9

Lin, R.-J. (2013). Moderating effects of total quality environmental management on environmental performance. Afr. J. Bus. Manag. 5, 8088–8099. doi: 10.5897/AJBM10.1399

Lindell, M., and Karagozoglu, N. (2001). Corporate environmental behaviour–a comparison between nrdic and US firms. Bus. Strategy Environ. 10, 38–52. doi: 10.1002/1099-0836(200101/02)10:1<38::aid-bse269>3.0.co;2-c

López-Gamero, M. D., Claver-Cortés, E., and Molina-Azorín, J. F. (2008). Complementary resources and capabilities for an ethical and environmental management: a qual/quan study. J. Bus. Ethics 82, 701–732. doi: 10.1007/s10551-007-9587-x

Mitchell, R. K., Agle, B. R., and Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. Acad. Manage. Rev. 22, 853–886. doi: 10.2307/259247

Montabon, F., Sroufe, R., and Narasimhan, R. (2007). An examination of corporate reporting, environmental management practices and firm performance. J. Oper. Manage. 25, 998–1014. doi: 10.1016/j.jom.2006.10.003

Murillo-Luna, J. L., Garcés-Ayerbe, C., and Rivera-Torres, P. (2008). Why do patterns of environmental response differ? A stakeholders’ pressure approach. Strategic Manage. J. 29, 1225–1240. doi: 10.1002/smj.711

Oke, A. (2007). Innovation types and innovation management practices in service companies. Int. J. Oper. Prod. Manage. 27, 564–587. doi: 10.1108/01443570710750268

Porter, M. E., and Kramer, M. R. (2019). Creating shared value. In Managing sustainable business. New York, NY.: Springer, 323–346.

Qi, G., Shen, L., Zeng, S., and Jorge, O. J. (2010). The drivers for contractors’ green innovation: an industry perspective. J. Cleaner Prod. 18, 1358–1365. doi: 10.1016/j.jclepro.2010.04.017

Ramus, C. A. (2018). Employee environmental innovation in firms: Organizational and managerial factors. Abingdon: Routledge.

Reinhardt, F. L. (1999). Bringing the environment down to earth. Harvard Bus. Rev. 77, 149–149.

Rennings, K. (2000). Redefining innovation—eco-innovation research and the contribution from ecological economics. Ecol. Eco. 32, 319–332. doi: 10.1016/s0921-8009(99)00112-3

Rusinko, C. (2007). Green manufacturing: an evaluation of environmentally sustainable manufacturing practices and their impact on competitive outcomes. IEEE Trans. Eng. Manage. 54, 445–454. doi: 10.1109/tem.2007.900806

Saeed, A., Jun, Y., Nubuor, S., Priyankara, H., and Jayasuriya, M. (2018). Institutional pressures, green supply chain management practices on environmental and economic performance: a two theory view. Sustainability 10, 1517. doi: 10.3390/su10051517

Salem, M. A., Shawtari, F., Shamsudin, M. F., and Hussain, H. B. I. (2018). The consequences of integrating stakeholder engagement in sustainable development (environmental perspectives). Sustainable Dev. 26, 255–268. doi: 10.1002/sd.1699

Sarkis, J., and Cordeiro, J. J. (2001). An empirical evaluation of environmental efficiencies and firm performance: pollution prevention versus end-of-pipe practice. European J. Oper. Res. 135, 102–113. doi: 10.1016/s0377-2217(00)00306-4

Seman, N. A. A., Govindan, K., Mardani, A., Zakuan, N., Saman, M. Z. M., Hooker, R. E., et al. (2019). The mediating effect of green innovation on the relationship between green supply chain management and environmental performance. J. Cleaner Prod. 229, 115–127. doi: 10.1016/j.jclepro.2019.03.211

Seman, N. A. A., Zakuan, N., Rashid, U. K., Nasuredin, J., and Ahmad, N. (2018). Understanding Stakeholder Pressures in Adopting Environmental Management Practices Based on Stakeholder Theory: A Review. Int. J. Res. 05, 1530–1545.

Sezen, B., and Çankaya, S. Y. (2013). Effects of green manufacturing and eco-innovation on sustainability performance. Procedia Soc. Behav. Sci. 99, 154–163. doi: 10.1016/j.sbspro.2013.10.481

Shahzad, F., Du, J., Khan, I., Shahbaz, M., Murad, M., and Khan, M. S. S. (2020). Untangling the influence of organizational compatibility on green supply chain management efforts to boost organizational performance through information technology capabilities. J. Cleaner Prod. 266, 1–13.

Shahzad, M., Qu, Y., Javed, S. A., Zafar, A. U., and Rehman, S. U. (2020). Relation of environment sustainability to CSR and green innovation: A case of Pakistani manufacturing industry. J. Cleaner Prod. 253, 119938. doi: 10.1016/j.jclepro.2019.119938

Siguaw, J. A., Simpson, P. M., and Enz, C. A. (2006). Conceptualizing innovation orientation: A framework for study and integration of innovation research. J. Prod.Innov. Manage. 23, 556–574. doi: 10.1111/j.1540-5885.2006.00224.x

Singh, S. K., and El-Kassar, A.-N. (2018). Green innovation and organizational performance: The influence of big data and the moderating role of management commitment and HR practices. Technol. Forecast. Social Change 144, 483–498.

Soewarno, N., Tjahjadi, B., and Fithrianti, F. (2019). Green innovation strategy and green innovation: the roles of green organizational identity and environmental organizational legitimacy. Manage. Decis. 57, 3061–3078. doi: 10.1108/md-05-2018-0563

Song, M., Yang, M. X., Zeng, K. J., and Feng, W. (2020). Green knowledge sharing, stakeholder pressure, absorptive capacity, and green innovation: Evidence from Chinese manufacturing firms. Bus. Strategy Environ. 29, 1517–1531. doi: 10.1002/bse.2450

Song, W., and Yu, H. (2018). Green innovation strategy and green innovation: The roles of green creativity and green organizational identity. Corporate Social Responsibility Environ.Manage. 25, 135–150. doi: 10.1002/csr.1445

Stock, R. M., and Zacharias, N. A. (2011). Patterns and performance outcomes of innovation orientation. J. Acad. Marketing Sci. 39, 870–888. doi: 10.1007/s11747-010-0225-2

Sulkowski, A. J., Edwards, M., and Freeman, R. E. (2018). Shake your stakeholder: Firms leading engagement to cocreate sustainable value. Organ. Environ. 31, 223–241. doi: 10.1177/1086026617722129

Tang, M., Walsh, G., Lerner, D., Fitza, M. A., and Li, Q. (2018). Green innovation, managerial concern and firm performance: An empirical study. Bus. Strategy Environ. 27, 39–51. doi: 10.1002/bse.1981

Tirabeni, L., De Bernardi, P., Forliano, C., and Franco, M. (2019). How can organisations and business models lead to a more sustainable society? A framework from a systematic review of the industry 4.0. Sustainability 11:6363. doi: 10.3390/su11226363

Ullah, M. (2017). Integrating environmental sustainability into human resource management: a comprehensive review on green human resource management. Maghreb Rev. Eco. Manage. 423, 1–17. doi: 10.4324/9781315768953-1

Umrani, W. A., Kura, K. M., and Ahmed, U. (2018). Corporate entrepreneurship and business performance: the moderating role of organizational culture in selected banks in pakistan. PSU Res. Rev. 2, 59–80. doi: 10.1108/prr-12-2016-0011

Venkatraman, N., and Ramanujam, V. (1986). Measurement of business performance in strategy research: a comparison of approaches. Acad. Manage. Rev. 11, 801–814. doi: 10.2307/258398

Wagner, M. (2007). On the relationship between environmental management, environmental innovation and patenting: evidence from german manufacturing firms. Res. Policy 36, 1587–1602. doi: 10.1016/j.respol.2007.08.004

Wang, S.-H., and Song, M.-L. (2014). Review of hidden carbon emissions, trade, and labor income share in china, 2001–2011. Energy Policy 74, 395–405. doi: 10.1016/j.enpol.2014.08.038

Weng, H.-H. R., Chen, J.-S., and Chen, P.-C. (2015). Effects of green innovation on environmental and corporate performance: a stakeholder perspective. Sustainability 7, 4997–5026. doi: 10.3390/su7054997

Xie, X., Huo, J., and Zou, H. (2019). Green process innovation, green product innovation, and corporate financial performance: a content analysis method. J. Bus. Res. 101, 697–706. doi: 10.1016/j.jbusres.2019.01.010

Xie, X., Zhu, Q., and Wang, R. (2019). Turning green subsidies into sustainability: how green process innovation improves firms’ green image. Bus. Strategy Environ. 28, 1416–1433. doi: 10.1002/bse.2323

Yakubu, O. (2017). Addressing environmental health problems in ogoniland through implementation of united nations environment program recommendations: environmental management strategies. Environments 4:28. doi: 10.3390/environments4020028

Yen, Y.-X., and Yen, S.-Y. (2012). Top-management’s role in adopting green purchasing standards in high-tech industrial firms. J. Bus. Res. 65, 951–959. doi: 10.1016/j.jbusres.2011.05.002

Yu, M. (2019). Impact of environmental regulation on green innovation practice of food enterprises: regulating effect of environmental awareness of different executives. Rev. Facult. Agr. Univ. Zulia 36, 149696095.

Zeng, S., Meng, X., Zeng, R., Tam, C. M., Tam, V. W., and Jin, T. (2011). How environmental management driving forces affect environmental and economic performance of SMEs: a study in the northern china district. J. Cleaner Prod. 19, 1426–1437. doi: 10.1016/j.jclepro.2011.05.002

Zhang, H., He, J., Shi, X., Hong, Q., Bao, J., and Xue, S. (2020). Technology characteristics, stakeholder pressure, social influence, and green innovation: empirical evidence from chinese express companies. Sustainability 12;2891. doi: 10.3390/su12072891

Zhang, J. A., and Walton, S. (2017). Eco-innovation and business performance: the moderating effects of environmental orientation and resource commitment in green-oriented SME s. R&d Manage. 47, E26–E39.

Zhang, J., Zhang, X., Wang, Q., and Ma, Z. (2019). “Relationship Between Institutional Pressures, Green Supply Chain Management Practices and Business Performance: An Empirical Research on Automobile Industry,” in Paper presented at the International Conference on Management Science and Engineering Management. San Francisco: ICMSEM.

Zhou, K. Z., Gao, G. Y., Yang, Z., and Zhou, N. (2005). Developing strategic orientation in china: antecedents and consequences of market and innovation orientations. J. Bus. Res. 58, 1049–1058. doi: 10.1016/j.jbusres.2004.02.003

Zhu, Q., and Sarkis, J. (2004). Relationships between operational practices and performance among early adopters of green supply chain management practices in chinese manufacturing enterprises. J. Oper. Manage. 22, 265–289. doi: 10.1016/j.jom.2004.01.005

Zhu, Q., Feng, Y., and Choi, S.-B. (2017). The role of customer relational governance in environmental and economic performance improvement through green supply chain management. J. Cleaner Prod. 155, 46–53. doi: 10.1016/j.jclepro.2016.02.124

Zhu, Q., Geng, Y., Fujita, T., and Hashimoto, S. (2010). Green supply chain management in leading manufacturers: case studies in japanese large companies. Manage. Res. Rev. 33, 380–392. doi: 10.1108/01409171011030471

Zhu, Q., Sarkis, J., Cordeiro, J. J., and Lai, K.-H. (2008). Firm-level correlates of emergent green supply chain management practices in the chinese context. Omega 36, 577–591.

Descriptive statistics.

Keywords : innovation orientation, competitor pressure, employees’ conduct, green innovation, environmental performance, organizational performance

Citation: Wang H, Khan MAS, Anwar F, Shahzad F, Adu D and Murad M (2021) Green Innovation Practices and Its Impacts on Environmental and Organizational Performance. Front. Psychol. 11:553625. doi: 10.3389/fpsyg.2020.553625

Received: 19 April 2020; Accepted: 03 November 2020; Published: 18 January 2021.

Reviewed by:

Copyright © 2021 Wang, Khan, Anwar, Shahzad, Adu and Murad. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Muhammad Aamir Shafique Khan, [email protected] ; Farooq Anwar, [email protected]

Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.

Information

Author Services

Initiatives

You are accessing a machine-readable page. In order to be human-readable, please install an RSS reader.

All articles published by MDPI are made immediately available worldwide under an open access license. No special permission is required to reuse all or part of the article published by MDPI, including figures and tables. For articles published under an open access Creative Common CC BY license, any part of the article may be reused without permission provided that the original article is clearly cited. For more information, please refer to https://www.mdpi.com/openaccess .

Feature papers represent the most advanced research with significant potential for high impact in the field. A Feature Paper should be a substantial original Article that involves several techniques or approaches, provides an outlook for future research directions and describes possible research applications.

Feature papers are submitted upon individual invitation or recommendation by the scientific editors and must receive positive feedback from the reviewers.

Editor’s Choice articles are based on recommendations by the scientific editors of MDPI journals from around the world. Editors select a small number of articles recently published in the journal that they believe will be particularly interesting to readers, or important in the respective research area. The aim is to provide a snapshot of some of the most exciting work published in the various research areas of the journal.

Original Submission Date Received: .

Active Journals
Find a Journal
Proceedings Series
For Authors
For Reviewers
For Editors
For Librarians
For Publishers
For Societies
For Conference Organizers
Open Access Policy
Institutional Open Access Program
Special Issues Guidelines
Editorial Process
Research and Publication Ethics
Article Processing Charges
Testimonials
Preprints.org
SciProfiles
Encyclopedia

Article Menu

Subscribe SciFeed
Recommended Articles
Google Scholar
on Google Scholar
Table of Contents

Find support for a specific problem in the support section of our website.

Please let us know what you think of our products and services.

Visit our dedicated information section to learn more about MDPI.

JSmol Viewer

Research on the impact of digital inclusive finance on green innovation of smes, 1. introduction, 2. literature review, 3. theoretical analysis and hypotheses, 4. research design, 4.1. model establishment, 4.2. variables selection, 4.2.1. dependent variable: green innovation of enterprises, 4.2.2. independent variable: digital inclusive finance, 4.2.3. control variables, 4.2.4. intermediate variable, 4.3. sample selection and data sources, 5. empirical results analysis, 5.1. descriptive statistical analysis, 5.2. benchmark regression analysis, 5.3. robustness test, 5.4. mechanism test, 5.5. threshold effect test, 5.6. heterogeneity analysis, 5.6.1. heterogeneity analysis of enterprise nature, 5.6.2. regional heterogeneity analysis, 5.6.3. heterogeneity analysis of equity structures, 6. discussions, 7. conclusions and implications, 7.1. conclusions.

There is a significant positive correlation between the breadth of digital financial coverage, depth of usage, level of inclusive finance digitization, and green innovation of SMEs. Therefore, improving the level of digital inclusive finance can promote green innovation in SMEs to a certain extent.
The intermediating effect test reveals that digital inclusive finance has a significant negative impact on the financing constraint index. Digital inclusive finance indirectly stimulates SMEs to enhance their green innovation capabilities by affecting their financing constraints and reducing the difficulty of financing.
The threshold effect results show that the dynamic impact of digital inclusive finance on SMEs’ green innovation is influenced by the digital level of digital inclusive finance, showing a significant positive and non-linear feature of increasing “marginal effect”.
Compared with state-owned SMEs, digital inclusive finance has a greater promotional effect on non-state-owned SMEs; compared with the central region, the promotion effect of digital inclusive finance on the eastern and western regions is rather weaker; compared with SMEs with concentrated equity ownership, digital inclusive finance has a greater positive impact on green innovation in SMEs with dispersed equity ownership.

7.2. Implications

The depth and breadth of digital finance usage, as well as the level of inclusive finance digitization, will become important driving forces for the rapid growth of digital inclusive finance. To promote the transformation of digital inclusive finance from “extensive” development to efficient and in-depth expansion, it is necessary to deepen the exploration of various functions of digital inclusive finance, introduce digital inclusive finance services to SMEs and underdeveloped regions through financial support, policy bias, etc., expand the breadth and depth of digital inclusive finance coverage and the level of inclusive finance digitization, optimize the efficiency of financial resource allocation, make it play a more important role in the development of green innovation in SMEs, and improve the regional development imbalance.
Tailored use of digital inclusive finance to drive green innovation in SMEs. In terms of enterprise nature, efforts should be made to further promote the reform of state-owned SMEs, remove the label of “distorted competition”, promote fair participation in market competition, and enhance the awareness of green innovation in state-owned enterprises while encouraging and supporting non-state-owned SMEs to unleash their green innovation vitality through digital inclusive finance. Differentiated policies on digital inclusive finance should also be formulated according to the characteristics of each region: the central region should accelerate the digital transformation of the manufacturing industry, promote the optimization and upgrading of industrial structure, narrow the digital gap with the eastern region, and achieve green innovation development through digital inclusive finance services; the eastern region should rely on mature financial markets, talent, and technology clustering advantages to amplify the green innovation effects of digital inclusive finance, striving to build a highland of green innovation; the western region should take advantage of policy biases, leverage the “latecomer advantage”, and gradually reduce the gap with regions with higher levels of digital inclusive finance development. Meanwhile, in the process of green innovation development in SMEs, to effectively prevent the infringement of the interests of minority shareholders by the largest shareholder, it is necessary to increase the proportion of non-largest shareholders so that large shareholders can check and balance each other, making decisions more scientific and creating a good internal environment for the enhancement of green innovation capabilities in SMEs.
SMEs should enhance their own awareness of green innovation, strengthen their own digital construction, and rationally use digital inclusive financial policies. According to the above analysis, digital inclusive finance can significantly promote the green innovation of SMEs. At the same time, with the improvement of the digital level of digital inclusive finance, its green innovation of small and medium-sized enterprises also presents a significant positive and non-linear feature of increasing “marginal effect”. Therefore, resource-based enterprises should enhance their awareness of green innovation. With the help of digital inclusive financial policies, green innovation activities should be vigorously carried out, but at the same time, attention should be paid to strengthening their own digital construction and improving the ability to acquire and control corporate data, thereby improving the efficiency of information transmission between borrowers and reducing information asymmetry, and thus helping financial institutions to effectively identify information related to green innovation of SMEs. The external financing capacity of SMEs for green innovation will be enhanced so that more green innovation entities can fully enjoy the spillover dividends of green innovation on a larger scale and at a lower cost.
By strengthening the flow and cooperation of resources within regions to expand the inclusiveness of digital inclusive finance and improve the environment for green innovation in SMEs. Regions should rationally use policy means to promote the cross-regional flow of resources, technology, and talents, deepen interregional exchanges and cooperation, and fully utilize spatial effects to promote the development of green innovation in SMEs within the region through the development of digital inclusive finance.

7.3. Limitations and Future Research

Author contributions, institutional review board statement, informed consent statement, data availability statement, conflicts of interest, nomenclature.


SMEs	small and medium-sized enterprises
GI	green innovation
BDIF	the breadth of digital financial coverage
DDIF	the depth of digital financial usage
GDIF	the digitization level of inclusive finance
MCF	management cost rate
ROA	return on assets
CSMAR	China Stock Market & Accounting Research Database
WIPO	World Intellectual Property Organization
ST	special treatment
GIA	green invention patent applications

Chareonpanich, M.; Kongkachuichay, P.; Donphai, W.; Mungcharoen, T.; Huisingh, D. Integrated transdisciplinary technologies for greener and more sustainable innovations and applications of Cleaner Production in the Asia–Pacific region. J. Clean. Prod. 2017 , 142 , 1131–1137. [ Google Scholar ] [ CrossRef ]
Lian, G.H.; Xu, A.T.; Zhu, Y.H. Substantive green innovation or symbolic green innovation? The impact of ER on enterprise green innovation based on the dual moderating effects. J. Innov. Knowl. 2022 , 7 , 100203. [ Google Scholar ] [ CrossRef ]
Ali, H.; ul Abideen, Z.; Jafar, A. Mapping the Evolution of Green Finance Research and Development in Emerging Green Economies. Resour. Policy 2024 , 91 , 104943. [ Google Scholar ]
Chen, S.; Zhang, J.; Liu, C. Environmental regulation, financing constraints, and enterprise emission reduction: Evidence from pollution levy standards adjustment. J. Financ. Res. 2021 , 9 , 51–71. [ Google Scholar ]
Jian, L.; Jinou, J.; Ming, C.C. The relationship between digital inclusive finance and corporate innovation from the perspective of inclusivity: Evidence from Chinese A-share listed companies. J. Manag. Sci. 2020 , 33 , 16–29. [ Google Scholar ]
Brown, J.R.; Fazzari, S.M.; Petersen, B.C. Financing innovation and growth: Cash flow, external equity, and the 1990s R&D boom. J. Financ. 2009 , 64 , 151–185. [ Google Scholar ]
Jia, J.S.; Lun, X.B.; Lin, S. Financial development, corporation innovation and economic growth: Empirical analysis from the patent perspective. J. Financ. Res. 2017 , 1 , 99–113. [ Google Scholar ]
Meierrieks, D. Financial development and innovation: Is there evidence of a Schumpeterian finance-innovation nexus? Ann. Econ. Financ. 2014 , 15 , 61–81. [ Google Scholar ]
Gomber, P.; Kauffman, R.J.; Parker, C.; Weber, B.W. On the fintech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. J. Manag. Inf. Syst. 2018 , 35 , 220–265. [ Google Scholar ] [ CrossRef ]
Wang, X.; He, G. Digital financial inclusion and farmers’ vulnerability to poverty: Evidence from rural China. Sustainability 2021 , 12 , 1668. [ Google Scholar ] [ CrossRef ]
Feng, D.Y.; Xing, C.J.; Dong, D.C. Digital financial inclusion poverty reduction: Theoretical logic, model construction and promotion path. South Financ. 2020 , 2 , 64–73. [ Google Scholar ]
Feng, S.; Zhang, R.; Li, G. Environmental decentralization, digital finance and green technology innovation. Struct. Chang. Econ. Dyn. 2022 , 61 , 70–83. [ Google Scholar ] [ CrossRef ]
Jiang, Z.Y.; Ma, G.J.; Zhu, W.Y. Research on the impact of digital finance on the innovation performance of enterprises. Eur. J. Innov. Manag. 2022 , 25 , 804–820. [ Google Scholar ] [ CrossRef ]
Lutfi, A.; Al-Okaily, M.; Alshirah, M.H.; Alshira’h, A.F.; Abutaber, T.A.; Almarashdah, M.A. Digital Financial Inclusion Sustainability in Jordanian Context. Sustainability 2021 , 13 , 6312. [ Google Scholar ] [ CrossRef ]
Aragon-Correa, J.A.; Leyva-de la Hiz, D.I. The influence of technology differences on corporate environmental patents: A resource-based versus an institutional view of green innovations. Bus. Strategy Environ. 2016 , 25 , 421–434. [ Google Scholar ] [ CrossRef ]
Yang, L.R.; Chen, J.H.; Li, H.H. Validating a model for assessing the association among green innovation, project success and firm benefit. Qual. Quant. 2016 , 50 , 885–899. [ Google Scholar ] [ CrossRef ]
Fussler, C.; James, P. Driving eco innovation: A Breakthrough Discipline for Innovation and Sustainability ; Pitman Publishing: Lanham, MD, USA, 1996; pp. 28–35. [ Google Scholar ]
Anex, R.P. Stimulating innovation in green technology: Policy alternatives and opportunities. Am. Behav. Sci. 2000 , 44 , 188–212. [ Google Scholar ] [ CrossRef ]
Fliaster, A.; Kolloch, M. Implementation of green innovations–The impact of stakeholders and their network relations. RD Manag. 2017 , 47 , 689–700. [ Google Scholar ] [ CrossRef ]
Ullah, R.; Ahmad, H.; Rehman, F.U.; Fawad, A. Green innovation and Sustainable Development Goals in SMEs: The moderating role of government incentives. J. Econ. Adm. Sci. 2023 , 39 , 830–846. [ Google Scholar ] [ CrossRef ]
Arroyave, J.J.; Sáez-Martínez, F.J.; González-Moreno, Á. Cooperation with universities in the development of eco-innovations and firms’ performance. Front. Psychol. 2020 , 11 , 612465. [ Google Scholar ] [ CrossRef ]
Hur, W.M.; Kim, Y.; Park, K. Assessing the effects of perceived value and satisfaction on customer loyalty: A ‘Green’s perspective. Corp. Soc. Responsib. Environ. Manag. 2013 , 20 , 146–156. [ Google Scholar ] [ CrossRef ]
Barbieri, N.; Ghisetti, C.; Gilli, M.; Marin, G.; Nicolli, F. A survey of the literature on environmental innovation based on main path analysis. Environ. Econ. Sustain. 2017 , 221–250. [ Google Scholar ] [ CrossRef ]
Castellacci, F.; Lie, C.M. A taxonomy of green innovators: Empirical evidence from South Korea. J. Clean. Prod. 2017 , 143 , 1036–1047. [ Google Scholar ] [ CrossRef ]
Cheng, C.C.J.; Shiu, E.C. Leveraging open innovation strategies for fueling eco-innovation performance in dynamic environments. Sustain. Account. Manag. Policy J. 2020 , 11 , 1245–1270. [ Google Scholar ] [ CrossRef ]
Li, X.; Zhang, Y.; Wang, X. Credit allocation, environmental regulation and green technology innovation. Shanghai Econ. Res. 2022 , 41 , 95–103. [ Google Scholar ]
Wakeford, J.J.; Gebreeyesus, M.; Ginbo, T.; Yimer, K.; Manzambi, O.; Okereke, C.; Black, M.; Mulugetta, Y. Innovation for green industrialisation: An empirical assessment of innovation in Ethiopia’s cement, leather and textile sectors. J. Clean. Prod. 2017 , 166 , 503–511. [ Google Scholar ] [ CrossRef ]
Wang, Y.; Zhao, Z.; Zhang, S.; Su, Y. Research on the impact of digital inclusive finance on regional carbon emissions: Based on the sustainable green innovation of small and medium-sized enterprises. J. Clean. Prod. 2023 , 428 , 139513. [ Google Scholar ] [ CrossRef ]
Jing, H.W.; Hui, L.Y. Green Innovation and Performance: The View of Organizational Capability and Social Reciprocity. J. Bus. Ethics 2017 , 145 , 309–324. [ Google Scholar ]
Yu, M.; Tsai, F.S.; Jin, H.; Zhang, H. Digital finance and renewable energy consumption: Evidence from China. Financ. Innov. 2022 , 8 , 58. [ Google Scholar ] [ CrossRef ]
Moreira-Santos, D.; Au-Yong-Oliveira, M.; Palma-Moreira, A. Fintech Services and the Drivers of Their Implementation in Small and Medium Enterprises. Information 2022 , 13 , 409. [ Google Scholar ] [ CrossRef ]
Li, C.; Yan, X.; Song, M.; Yang, W. Fintech and corporate innovation: Evidence from Chinese NEEQ-Listed companies. China Ind. Econ. 2020 , 38 , 81–98. [ Google Scholar ]
Wan, J.; Zhou, Q.; Xiao, Y. Digital finance, financial constraint, and enterprise innovation. Econom. Rev. 2020 , 1 , 71–83. [ Google Scholar ]
Yao, L.; Yang, X. Can digital finance boost SME innovation by easing financing constraints? Evidence from Chinese GEM-listed companies. PLoS ONE 2022 , 17 , e0264647. [ Google Scholar ] [ CrossRef ] [ PubMed ]
Xue, L.; Zhang, X. Can digital financial inclusion promote green innovation in heavily polluting companies? Int. J. Environ. Res. Public Health 2022 , 19 , 7323. [ Google Scholar ] [ CrossRef ] [ PubMed ]
Li, X.; Ran, G. How does digital financial development affect the quality of technological innovation? J. Mod. Econ. 2021 , 69–77. [ Google Scholar ] [ CrossRef ]
Goldstein, I.; Jiang, W.; Karolyi, G.A. To FinTech and beyond. Rev. Financ. Stud. 2019 , 32 , 1647–1661. [ Google Scholar ] [ CrossRef ]
Huang, Y.; Lin, C.; Sheng, Z.; Wei, L. FinTech Credit and Service Quality ; Working Papers; Geneva Financial Research Institute: Geneva, Switzerland, 2018. [ Google Scholar ]
He, Z.; Chen, H.; Hu, J.; Zhang, Y. The impact of digital inclusive finance on provincial green development efficiency: Empirical evidence from China. Environ. Sci. Pollut. Res. 2022 , 29 , 90404–90418. [ Google Scholar ] [ CrossRef ] [ PubMed ]
Lin, B.; Ma, R. How does digital finance influence green technology innovation in China? Evidence from the financing constraints perspective. J. Environ. Manag. 2022 , 320 , 115833. [ Google Scholar ] [ CrossRef ] [ PubMed ]
Tang, S.; Wu, X.; Zhu, J. Digital finance and corporate technology innovation-structural characteristics, mechanism identification and differences in effects under financial regulation. Manag. World 2020 , 36 , 52–66. [ Google Scholar ]
Lee, I.; Shin, Y. Fintech: Ecosystem, business models, investment decisions, and challenges. Bus. Horiz. 2018 , 61 , 35–46. [ Google Scholar ] [ CrossRef ]
Lu, L. Promoting SME finance in the context of the fintech revolution: A case study of the UK’s practice a Nd regulation. Bank. Financ. Law Rev. 2018 , 22 , 317–343. [ Google Scholar ]
Feng, S.; Guo, R. Digital Finance, Bank Competition, and Bank Efficiency. Reform 2019 , 32 , 75–89. [ Google Scholar ]
Wang, X. Venture capital, R & D investment and green technology innovation in China. Ind. Technol. Econ. 2022 , 40 , 23–27. [ Google Scholar ]
Liang, L.; Li, Y.; Chen, S. The Effect and Mechanism Test of Digital Financial inclusion Promoting Enterprise Green Technology Innovation. Stat. Decis. 2023 , 39 , 168–173. [ Google Scholar ]
Sun, H.; Luo, Y.; Liu, J.; Bhuiyan, M.A. Digital inclusive finance, R&D investment, and green technology innovation nexus. PLoS ONE 2024 , 19 , e0297264. [ Google Scholar ]
Zhong, W.L.; Jie, H.Y.; Lei, Z. Comparison and application of moderating and mediating effects. Acta Polym. Sin. 2005 , 50 , 268–274. [ Google Scholar ]
Wurlod, J.-D.; Noailly, J. The impact of green innovation on energy intensity: An empirical analysis for 14 industrial sectors in OECD countries. Energy Econ. 2018 , 71 , 47–61. [ Google Scholar ] [ CrossRef ]
Feng, G.; Yi, W.J.; Fang, W.; Tao, K.; Xun, Z.; Yun, C.Z. Measure of financial development of China digital pratt & Whitney: Index and spatial characteristics. J. Econ. 2020 , 12 , 1401–1418. [ Google Scholar ]
Liu, J.; Jiang, Y.; Gan, S.; He, L.; Zhang, Q. Can digital finance promote corporate green innovation? Environ. Sci. Pollut. Res. 2022 , 29 , 35828–35840. [ Google Scholar ] [ CrossRef ]
Hu, J.; Pan, X.; Huang, Q. Quantity or quality? The impacts of environmental regulation on firms’ innovation–Quasi-natural experiment based on China’s carbon emissions trading pilot. Technol. Forecast. Soc. Chang. 2020 , 158 , 120122. [ Google Scholar ] [ CrossRef ]
Li, X.; Shao, X.; Chang, T.; Albu, L.L. Does digital finance promote the green innovation of China’s listed companies? Energy Econ. 2022 , 114 , 106254. [ Google Scholar ] [ CrossRef ]
Kaplan, S.N.; Zingales, L. Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints? Q. J. Econ. 1997 , 112 , 169–215. [ Google Scholar ] [ CrossRef ]
Aiello, F.; Cardamone, P.; Mannarino, L.; Pupo, V. Green patenting and corporate social responsibility: Does family involvement in business matter? Corp. Soc. Responsib. Environ. Manag. 2021 , 28 , 1386–1396. [ Google Scholar ] [ CrossRef ]
Hansen, B.E. Threshold effects in non-dynamic panels: Estimation, testing, and inference. J. Econom. 1999 , 93 , 345–368. [ Google Scholar ] [ CrossRef ]
Xu, W.; Lan, W. Major shareholders who are in absolved: Government subsidies drive green innovation under the guidance of green innovation A new explanation of force. Res. Dev. Manag. 2020 , 32 , 24–36. [ Google Scholar ]
Jiang, X.; Wang, X.; Ren, J.; Xie, Z. The Nexus between Digital Finance and Economic Development: Evidence from China. Sustainability 2021 , 13 , 7289. [ Google Scholar ] [ CrossRef ]
Xie, H.; Shen, Y.; Zhang, H. Can digital finance promote entrepreneurship. Evidence from China. Economics 2018 , 17 , 1557–1580. [ Google Scholar ]
Li, W.; Pang, W. Digital inclusive finance, financial mismatch and the innovation capacity of small and medium-sized enterprises: Evidence from Chinese listed companies. Heliyon 2023 , 9 , e13792. [ Google Scholar ] [ CrossRef ]

Variable	Variable Name Symbol	Measurement Method
Enterprise scale	Size	Obtained by taking the logarithm of the total assets of the enterprise.
Asset–liability ratio	Lev	Measured by the ratio of the total liabilities and total assets of the enterprise in the year.
Equity concentration	Top1	It is expressed by the shareholding ratio of the largest shareholder.
Management cost rate	MCF	The current management expenses of the enterprise are divided by the operating income.
Return on assets	ROA	Measured by the total profit of the enterprise in the year and the ratio of total assets.

Variable	N	Mean	SD	Min	Max	P50	Range
GI	4927	0.70	0.99	0	5.52	0	5.21
BDIF	4927	5.45	0.51	2.64	6.00	5.64	3.36
DDIF	4927	5.46	0.36	3.14	5.92	5.55	2.78
GDIF	4927	5.43	0.38	2.64	5.87	5.60	3.23
KZ	4927	0.11	2.51	−12.91	7.58	0.48	20.49
Size	4927	21.13	0.90	18.39	25.91	21.04	7.52
Lev	4927	0.29	0.17	0.0081	0.97	1.28	6271
Top1	4927	0.31	0.13	0.041	0.90	29.06	85.91
ROA	4927	0.07	0.05	−0.03	0.43	0.07	0.47
MCF	4927	0.11	0.07	0.0013	1.07	0.09	1.07

Variable	(1)	(2)	(3)
Variable	GI	GI	GI
BDIF	0.36 ***
	(2.76)
DDIF		0.27 *
		(1.89)
GDIF			0.19 *
			(1.91)
Size	0.18 **	0.17618 **	0.18 **
	(4.91)	(4.91)	(4.93)
Lev	0.54 ***	0.54 ***	0.55 ***
	(3.98)	(4.00)	(4.02)
ROA	0.22	0.25	0.30
	(0.72)	(0.80)	(0.97)
MCF	−0.16	−0.11	−0.07
	(−0.57)	(−0.39)	(−0.25)
Top1	−0.003	−0.005	−0.009
	(−0.02)	(−0.03)	(−0.06)
Constant	−5.15 ***	−4.74 ***	−4.28 ***
	(−5.23)	(−4.70)	(−4.89)
Year-fixed	control	control	control
Ind-fixed	control	control	control
N	4927	4927	4927
R2a	0.23	0.23	0.23

Variable	(1)	(2)	(3)	(4)	(5)	(6)
	Replace the Interpreted Variables			The Core Interpretation Variable Lags Behind One Period
	GIA	GIA	GIA	GI	GI	GI
BDIF	1.54 ***
	(3.58)
DDIF		0.89 **
		(1.98)
GDIF			1.161 ***
			(2.02)
L.BDIF				2.30 ***
				(3.77)
L.DDIF					1.18 *
					(1.86)
L.GDIF						1.89 *
						(1.68)
Constant	9.98 ***	8.53 ***	11.59 ***	12.91 ***	11.91 ***	15.24 ***
	(−5.02)	(−4.73)	(−4.71)	(−3.80)	(−4.07)	(−3.14)
Controls	YES	YES	YES	YES	YES	YES
Year-fixed	YES	YES	YES	YES	YES	YES
Ind-fixed	YES	YES	YES	YES	YES	YES
N	4927	4927	4927	4927	4927	4927
R2a	0.15	0.15	0.15	0.18	0.18	0.18

Variable	(1)	(2)	(3)	(4)	(5)	(6)
Variable	KZ	KZ	KZ	GI	GI	GI
BDIF	−0.232 **			2.26 ***
	(−2.04)			(3.67)
DDIF		−0.27 **			1.11 *
		(−2.30)			(1.71)
GDIF			−0.05			2.17 *
			(−0.22)			(1.84)
KZ				−0.20 ***	−0.21 ***	−0.21 ***
				(−2.61)	(−2.66)	(−2.71)
Constant	−11.40 ***	−11.41 ***	−11.57 ***	−6.87 ***	−6.77 ***	−6.79 ***
	(−15.34)	(−15.38)	(−15.55)	(−16.66)	(−16.42)	(−16.43)
Controls	YES	YES	YES	YES	YES	YES
Year-fixed	YES	YES	YES	YES	YES	YES
Ind-fixed	YES	YES	YES	YES	YES	YES
N	4927	4927	4927	4927	4927	4927
R2a	0.32	0.32	0.32	0.17	0.16	0.16

Threshold Variables	Threshold Type	Threshold Values	F-Statistics	p-Value	Lower Limit	Upper Limit
GDIF	First threshold	5.7794 **	20.39	0.0167	5.7781	5.78
	Second threshold	5.5252	5.47	0.52	5.5141	5.5292
	Third threshold	5.6934	6.12	0.7667	5.6881	5.6986

Variables	GI
GDIF ≤ 5.7794	0.521 *
	(1.898)
GDIF ≥ 5.7794	0.470 *
	(1.731)
Size	0.123 *
	(1.815)
Lev	0.002
	(0.333)
ROA	−0.934 *
	(−1.694)
MCF	−0.715
	(−1.125)
Top1	0.009 *
	(1.689)
Constant	−4.952 ***
	(−3.079)
Observations	1062
Number of ID	177
R2a	0.155

Variable	(1)	(2)	(3)	(4)	(5)	(6)
	State-Owned	Non-State-Owned	State-Owned	Non-State-Owned	State-Owned	Non-State-Owned
	GI	GI	GI	GI	GI	GI
BDIF	0.41	2.41 ***
	(0.19)	(3.32)
DDIF			1.86	1.10
			(0.67)	(1.40)
GDIF					0.76	1.87
					(0.15)	(1.58)
Controls	YES	YES	YES	YES	YES	YES
Constant	−2.93	−6.93 **	−2.34	−9.57 **	−6.58	−4.25 **
	(−0.49)	(−2.41)	(−0.27)	(−2.21)	(−1.09)	(−2.00)
Year-fixed	YES	YES	YES	YES	YES	YES
Ind-fixed	YES	YES	YES	YES	YES	YES
N	320	4607	320	4607	320	4607
R2a	0.27	0.11	0.28	0.11	0.27	0.11

Variable	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
	East Regions	West Regions	Central Regions	East Regions	West Regions	Central Regions	East Regions	West Regions	Central Regions
	GI	GI	GI	GI	GI	GI	GI	GI	GI
BDIF	3.02 ***	6.28 **	7.89 *
	(3.08)	(2.15)	(1.83)
DDIF				1.11	7.10	16.38 *
				(1.01)	(1.61)	(1.84)
GDIF							0.88	3.19	17.70 *
							(0.57)	(0.94)	(1.92)
Controls	YES	YES	YES	YES	YES	YES	YES	YES	YES
Constant	3.04 ***	10.47 *	10.51	3.61 ***	10.79 *	11.00	2.40 **	9.80 *	10.81
	(−2.66)	(−1.82)	(−0.91)	(−3.08)	(−1.81)	(−0.94)	(−2.23)	(−1.81)	(−0.93)
Year-fixed	YES	YES	YES	YES	YES	YES	YES	YES	YES
Ind-fixed	YES	YES	YES	YES	YES	YES	YES	YES	YES
N	3289	337	503	3289	337	503	3289	337	503
R2a	0.15	0.09	0.20	0.14	0.09	0.21	0.14	0.09	0.20

Variable	(1)	(2)	(3)	(4)	(5)	(6)
	Equity Dispersion Group			Equity Concentration Group
	GI	GI	GI	GI	GI	GI
BDIF	1.86 **			2.73 ***
	(2.06)			(2.69)
DDIF		1.76 *			0.68
		(1.83)			(0.60)
GDIF			4.47868 ***			0.47
			(2.61)			(0.28)
Controls	YES	YES	YES	YES	YES	YES
Constant	−6.61 ***	−6.58 ***	−6.64 ***	−6.78 ***	−6.60 ***	−6.55 ***
	(−3.16)	(−3.14)	(−3.15)	(−2.92)	(−2.86)	(−2.81)
Year-fixed	YES	YES	YES	YES	YES	YES
Ind-fixed	YES	YES	YES	YES	YES	YES
N	2419	2419	2419	2508	2508	2508
R2a	0.12	0.12	0.13	0.12	0.12	0.12

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of MDPI and/or the editor(s). MDPI and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

Share and Cite

Du, C.; Hu, M.; Wang, T.; Kizi, M.D.D. Research on the Impact of Digital Inclusive Finance on Green Innovation of SMEs. Sustainability 2024 , 16 , 4700. https://doi.org/10.3390/su16114700

Du C, Hu M, Wang T, Kizi MDD. Research on the Impact of Digital Inclusive Finance on Green Innovation of SMEs. Sustainability . 2024; 16(11):4700. https://doi.org/10.3390/su16114700

Du, Chunli, Min Hu, Tao Wang, and Mirakhimova Dilafruz Dilmurod Kizi. 2024. "Research on the Impact of Digital Inclusive Finance on Green Innovation of SMEs" Sustainability 16, no. 11: 4700. https://doi.org/10.3390/su16114700

Article Metrics

Article access statistics, further information, mdpi initiatives, follow mdpi.

Subscribe to receive issue release notifications and newsletters from MDPI journals

Library of Congress
Research Guides

Green Business: Sources of Information

Introduction.

General Resources
Industry Resources
Standards and Certifications
Green Consumers
Organizations & Research Institutions
Using the Library of Congress

Business Reference : Ask a Librarian

Have a question? Need assistance? Use our online form to ask a librarian for help.

Author: Gulnar Nagashybayeva, Business Librarian, Science & Business Reading Room

Note: Based on the guide created by Ann Amrine, Montgomery College Paul Peck Humanities Intern, 2013

Created: April 2020

Last Updated: January 2022

Owl above door to center reading room on fifth floor. Library of Congress John Adams Building, Washington, D.C.

Get connected to the Library’s large and diverse collections related to science, technology, and business through our Inside Adams Blog. This blog also features upcoming events and collection displays, classes and orientations, new research guides, and more.

Go green Eco and Bio labels with Stickers

Green businesses, also called sustainable businesses, seek to balance profit with the health of the planet and its various populations. There is a vast array of services and products offered by businesses in this category. The degree to which sustainable practices are embraced and implemented varies widely among them depending on many conditions, including public awareness, the economy, the level of industrialization, the degree of government support and regulation, and even the age of the entrepreneurs and decision makers in a given region. That said, the green business economy has expanded greatly in the past decade, and continues to do so today as it is increasingly embraced by employees, consumers, investors, and other stakeholders, especially in light of the recent assessment of imminent threat of climate change to our planet.

U.S. Environmental Protection Agency explains sustainability based on a simple principle: "Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment," 1 and emphasizes the importance of making sure that we have and will continue to have the water, materials, and resources to protect human health and our environment.

According to the World Council for Economic Development (WCED), sustainable development "meets the needs of the present without compromising the ability of future generations to meet their own needs." 2 The ideal green business applies these principles to the entire lifecycle of a product or service, from conception to disposal.

In 2015 the United Nations Member States adopted the 2030 Agenda for Sustainable Development External that set 17 Sustainable Development Goals (SDGs) to achieve a sustainable and equitable future for both people and planet by ending poverty, fighting inequality and tackling the urgency of climate change. The business community is one of the major players in this effort to make this future a reality with a great number of companies looking closely at their impact on the environment and adopting Environmental, Social and Corporate Governance standards, known as ESG, in a move toward ethical and sustainable business operations. The number of certified B corporations or B Corps who meet high environmental performance standards are on the rise. Eco-conscious consumers and impact investors are seeking out sustainable brands and stocks with high ESG ratings. There is an increasing push for transparency and more scrutiny into corporate sustainability practices with significant implications for corporations that resort to "greenwashing" and "green marketing" tactics instead of constructive and genuine responses to environmental issues. 3

This guide presents general resources on environmentalism and green business addressing its past, present and future. Resources on various green initiatives and sustainability guidance are offered for selected industries: agriculture, building and design, finance, fashion, manufacturing, and urban transportation. Also included in the guide are resources for businesses with sustainability goals and consumers interested in changing their lifestyles and consumption patterns with sustainability in mind.

Each section includes freely available online resources, subscription databases available from subscribing institutions, print resources from the collections of the Library of Congress, and links to explore the Library's catalog for more materials on the subject. If you have any questions on this subject please Ask a Librarian .

Related Research Guides

Corporate Social Responsibility (CSR): A Resource Guide covers the responsibility of businesses to society and includes historical resources, current standards, and company/facility information.

The discipline of CSR broadens the responsibility of businesses beyond their obligation to stockholders—to society and the environment. This research guide includes lists of historical resources, current standards, and company/facility information.

Renewable Energy Industries: A Research Guide offers resources related to hydropower, solar, wind, geothermal, and biomass industries.

This guide to researching the business of generating and distributing renewable energy focuses on resources related to hydropower, solar, wind, geothermal, and biomass industries as well as the electric power sector in the United States.

Environmental Law: A Beginner's Guide provides resources on environmental law, including federal legislative and regulatory information, and information about state environmental legal research.

This guide, from the Law Library of Congress, provides resources on environmental law, including general resources, federal legislative and regulatory information, and information about state environmental legal research.

About Business Reference Services

Part of the Science & Business Reading Room at the Library of Congress, the Business Section is the starting point for conducting research at the Library of Congress in the subject areas of business and economics. Here, reference specialists in specific subject areas of business assist patrons in formulating search strategies and gaining access to the information and materials contained in the Library's rich collections of business and economics materials.

U. S. Environmental Protection Agency, Learn About Sustainability . Back to text
United Nations, Our Common Future, From One Earth to One World External (PDF, 4MB). Report of the World Commission on Environment and Development. p.16. Back to text
Beau River, The Increasing Dangers Of Corporate Greenwashing In The Era Of Sustainability. External Forbes, April 29, 2021. Back to text
Next: General Resources >>
Last Updated: Mar 21, 2024 3:35 PM
URL: https://guides.loc.gov/green-business

Advancing green finance: a review of sustainable development

Open access
Published: 21 October 2023
Volume 1 , article number 20 , ( 2023 )

Cite this article

You have full access to this open access article

Chengbo Fu ORCID: orcid.org/0000-0001-9236-0107 1 ,
Lei Lu 2 &
Mansoor Pirabi 1

10k Accesses

5 Citations

Explore all metrics

This study comprehensively reviews the relationship between green finance and sustainable development, specifically focusing on combatting climate change and achieving carbon neutrality. Utilizing a narrative review methodology, the study examines a range of scholarly articles and publications to identify key themes, findings, and future directions in green finance. The review emphasizes the crucial role of substantial investments in green and low-carbon initiatives to address climate change effectively and promote sustainable economic growth. It highlights the necessity of robust regulatory frameworks that facilitate the availability of green finance and the integration of carbon–neutral practices. Additionally, the paper explores the potential of impact investing, wherein investors accept lower financial returns in exchange for non-financial benefits in green finance. It underscores the influential role of institutional ownership in guiding companies toward enhanced environmental and social performance. Moreover, integrating environmental, social, and governance (ESG) factors in investment decisions is critical for sustainable finance. Addressing the intersection of climate change and risk management, the review highlights the implications of environmental risks on financial decision-making. Effective communication strategies can raise public awareness and support for climate policies. The study concludes by calling for collaboration, further research, and policy measures to advance green finance and foster sustainable economic growth. It recommends aligning financial incentives with sustainable outcomes, fostering transparency, and incorporating social equity in green finance initiatives to contribute towards achieving sustainable development goals and promoting a greener future.

Advancing green finance: a review of climate change and decarbonization

Innovative Green Finance Tools

The influence of environmental and social criteria in green finance decision-making: insights and trends

Avoid common mistakes on your manuscript.

1 Introduction

In the rapidly evolving global landscape, the imperative of sustainable development and the urgent need to combat climate change cannot be overstated (Radu et al. 2013 ). Green finance, which centers around environmentally friendly investments and practices, has emerged as a pivotal instrument in achieving carbon neutrality and greening sustainable economic growth (Bhatnagar et al. 2022 ). This article aims to comprehensively review the intricate relationship between green finance and sustainable development.

The advancement of green finance is indispensable in attaining sustainable development goals and addressing pressing environmental challenges (Goel et al. 2022 ). This review critically examines the existing literature on the nexus between green finance and sustainable development, particularly emphasizing the prospective implications for the finance industry.

The reviewed scholarly papers significantly contribute to our understanding of the importance of substantial investments in green and low-carbon initiatives in combating climate change and achieving carbon neutrality. They accentuate the need for robust regulatory frameworks that facilitate the increased availability of green finance and the integration of carbon–neutral practices. A thorough analysis of prominent institutions like the Green Climate Fund is included in this study, which emphasizes the importance of ensuring that climate funding initiatives are scaled up by diversifying funding sources and mitigating conventional finance risks (Cevik and Jalles 2022 ).

The papers also discusse how green financing impacts decarbonization efforts and emphasizes the need for further research to increase our understanding of their effectiveness (Al Mamun et al. 2022 ). The study also highlights the significance of investors' preferences for sustainable investments, emphasizing the influence of social choices on economic decision-making. They underscore the indispensability of transparency, standardization, and social equity in shaping the contours of green finance (Aramonte and Zabai 2021 ).

A comprehensive analysis of the interaction between green finance and sustainable development is also included in the review, including topics such as sustainable development goals, financial institutions' pivotal role, and the impact of environmental policies on research and development funding. The papers underscore the enduring positive effects of green finance on sustainable growth, necessitating the formulation of precise definitions, relevant studies, and tax policies to expedite the adoption of green financing and enhance climate change mitigation (NACI, S., 2021 ).

Additionally, the potential for impact investing as a driver for green finance is meticulously explored. The papers underscore investors' willingness to accept lower financial returns for non-financial benefits and the instrumental role of institutional ownership in steering firms toward enhanced environmental and social performance. The articles accentuate the critical importance of impact investing and sustainable finance in fulfilling ecological responsibilities while drawing attention to the scope of insensitivity in sustainable investing (Edmans and Kacperczyk 2022 ).

It explores how environmental, social, and governance (ESG) factors affect investment decisions in green finance (Jagannathan et al. 2017 ). The papers underline the pivotal role of robust ESG practices and disclosure in bolstering risk-adjusted returns (Azarow et al. 2021 ). Given the increasing prominence of green finance and sustainable investing, incorporating ESG criteria when constructing investment portfolios is paramount.

Moreover, the intersection of climate change and risk management is a salient aspect investigated in the review. The study emphasizes the ramifications of environmental risks for financial decision-making and the indispensability of environmentally conscious investing. Effective communication strategies are instrumental in raising public awareness and garnering support for climate policies. Political uncertainty is critical in investment decisions, particularly for industries grappling with stranded assets (Khatibi et al. 2021 ).

Lastly, the papers underscore the indispensable role of green finance in fostering sustainable economic growth and tackling climate change. The potential for aligning financial incentives with sustainable outcomes is highlighted, necessitating active monitoring and engagement with portfolio companies on environmental issues (Starks 2021 ). Implementation challenges and the need for comprehensive and comparable data on green financing activities are also addressed, providing crucial insights into the instrumental role of green finance in advancing sustainable economic development.

2 Research methodology

In conducting a comprehensive review on the topic of “Advancing Green Finance: A Review of Sustainable Development and the Future Directions,” a Narrative review method was used.

We conducted extensive research to identify scholarly articles, publications, and research papers on green finance, sustainable development, and their future implications. Various sources, such as online databases and academic platforms, were utilized to compile relevant information on the subject.

Texts were chosen for their pertinence and contributions to the research subject. Reviewed works from peers that offered valuable perspectives on the correlation between green finance, sustainable development, and forthcoming prospects were incorporated into the examination.

We analyzed and synthesized the selected literature to identify key findings, themes, and trends related to green finance and sustainable development. According to the review, shared viewpoints were identified, areas of study were lacking, policy recommendations were made, and implications for future research were identified.

The findings from the analyzed literature were organized into distinct sections to provide a structured overview of the subject matter. These sections included topics such as “Green Finance and Low Carbon Initiatives” and “Green Finance and Sustainable Development”. The narrative review synthesized the collective findings of the selected literature, highlighting the significance of green finance in achieving sustainable development goals and addressing climate change. It emphasized the role of financial institutions, policy recommendations, impact investing, ESG criteria, risk management, renewable energy, and the challenges and opportunities associated with implementing green finance initiatives.

The findings of this narrative review contribute to our understanding of green finance, sustainable development, and its implications for the financial industry, corporate behavior, and the environment. They provide valuable insights for investors, policymakers, and researchers seeking to promote sustainable investments and drive green finance initiatives.

Researchers worldwide have been actively exploring the realms of green finance and sustainable development in response to the pressing challenges posed by climate change and environmental degradation. To analyze the trends in research focused on this crucial subject, we evaluated an available selection of references used in this research. We organized the keyword research into various groups and subgroups based on the keywords used. This interpretation aims to provide valuable insights into the distribution of keywords, highlighting their significance and implications for the overall research in this field. By emphasizing green finance and sustainable development, policymakers, investors, and stakeholders can make informed decisions to advance a greener and more sustainable future.

A thorough examination of the articles’ keywords identified primary groups, as demonstrated in Fig. 1 . This visual representation highlights the most frequently used subjects in the papers and their corresponding frequencies.

Analysis of Initial Keyword Groupings

Furthermore, Fig. 2 presents a word cloud diagram visually depicting the initial grouping to facilitate a more exhaustive analysis of the subjects addressed in the literature.

Word Cloud Analysis of Initial Keyword Groupings

The haste over climate change must be managed by low-carbon initiatives and green financing, as highlighted by keywords such as "Climate Change," "Carbon Emissions," and "Global Warming." Supporting climate-related projects is emphasized by instruments like "Green Bonds" and the "Green Climate Fund." There is an emphasis on renewable energy and low-carbon energy, indicating a growing concern with investing in sustainable energy sources. Answerable investing, as indicated by CSR and ESG, shows the increasing consideration of environmental and social factors in investment decisions.

Furthermore, "Impact Investing" and "Sustainable Investing" support the trend of seeking socially responsible investment opportunities, while "Sustainable Development" and "Sustainable Finance" play a vital role in supporting economic growth and achieving developmental goals. The multifaceted role of financial institutions in promoting green finance and sustainable investments is highlighted by keywords related to various financial instruments and entities. The importance of balancing financial performance and risk management within green finance is indicated by "Stock Returns" and "Leverage." Additionally, investor preferences and social choices are influential factors in shaping green finance, as suggested by "Portfolio Choice." Workforce participation and public engagement are essential for the success of green finance initiatives. Geopolitical risks, mainly related to "China" and the "Russia-Ukraine Conflict," impact global green finance and sustainable development efforts, requiring consideration in sustainability planning. Lastly, "Trade Openness" highlights the significance of international trade policies in influencing green finance practices, emphasizing the importance of global cooperation in addressing sustainability challenges.

Figure 3 provides a detailed description of the subgroups. This keyword analysis offers insightful information on the most important trends and issues concerning climate change, green finance, Sustainable finance, ESG, CSR etc. Nevertheless, the findings can be reorganized and expanded upon as follows to enhance the description of the results:

Word Cloud Analysis of Subgroupings Keyword Groupings

A comprehensive analysis of keywords in references reveals the diverse and extensive coverage of green finance and sustainable development topics in research. The concentration of keywords in specific groups indicates a strong focus on climate change, environmental impact, responsible investing, financial institutions, and social and economic factors within green finance. By considering these trends and interpretations, stakeholders can make informed decisions and contribute to a greener and more sustainable future.

3 Research perspectives and progresses

3.1 green finance and low carbon initiatives.

The collective findings of these papers contribute to our understanding of the relationship between green finance and low carbon initiatives. They underscore the importance of substantial investments in green and low-carbon initiatives to achieve carbon neutrality and combat climate change. The papers suggest policy recommendations to strengthen the regulatory framework for green finance, increase its availability, and incorporate carbon–neutral practices. Investor preferences for sustainable investments highlight the influence of social choices on economic decisions, emphasizing the importance of transparency, standardization, and social equity.

3.1.1 Fostering green finance and low-carbon development

Kong's ( 2022 ) research shows that carbon neutrality is crucial to climate change. New energy is necessary to promote carbon neutrality. He explains the meaning and significance of new energy in transitioning to carbon neutrality. Investing in green and low-carbon initiatives is essential to developing environmentally friendly energy sources.

The research examines China's growth patterns and critical green finance features. The author presents several policy recommendations focusing on the advantages of carbon–neutral practices in green finance. As part of these recommendations, the framework for sustainable financial regulation needs to be strengthened. In addition, they include creating an environment conducive to green finance development in China by expanding sustainable financial services.

This paper presents policy recommendations for fostering green finance in China. Kong ( 2022 ) also analyzes the United States' strategies and experiences promoting low-carbon development and suggests countermeasures for China's growth. The proposed actions include enhancing the top-level design and regulatory policy system, improving the energy structure, increasing the share of clean energy, improving industrial facilities, lowering energy consumption in critical industries, establishing a comprehensive zero-carbon technology system, promoting low-carbon research and development, and identifying low-carbon development paths appropriate for the region.

Kong's study on the relationship between green finance and low-carbon development explains the novel energy concept and its role in carbon neutrality. Kong's study on green finance and low-carbon development focuses on China. The report also discusses the current state of green finance in China, highlighting the benefits of carbon neutrality. The study's policy recommendations to strengthen the regulatory framework for green finance and expand its availability in China offer essential guidance for policymakers and stakeholders.

3.1.2 The role of the Green Climate Fund

The article by Amighini et al. ( 2022 ) addresses the current state and potential future climate finance strategies, specifically focusing on the Green Climate Fund (GCF). The authors assert that further research is required on the GCF's appropriation distribution tactics, even though they agree that most political and academic emphasis has been on increasing money for the GCF.

The authors propose that to increase the GCF's efficacy, it should shift away from exclusively providing public money for non-bankable projects and instead concentrate on channeling both public and private sources of finance and de-risking more conventional forms of finance. The authors claim the strategy would allow the GCF to scale up climate funding and improve its appeal to investors.

Nevertheless, non-bankable projects may be more crucial to meeting the needs of developing countries, especially in sectors or regions without private investment. As a multilateral fund, the GCF should focus not on attracting private investment but on the needs of developing countries and the public good. Therefore, the GCF may still need to fund non-bankable projects critical to climate adaptation and mitigation in developing countries, even if they require help attracting private investment.

Nonetheless, supporters of this argument may point out that the GCF could do more to leverage private investment and mobilize capital to address the needs of developing countries. By providing de-risking mechanisms and supporting innovative approaches, the GCF could encourage private investment in low-carbon and climate-resilient projects and help mobilize the necessary resources to address climate change.

The paper critically discusses potential future climate finance strategies, focusing on the Green Climate Fund. While there are differing opinions on the most effective approach for the GCF, the authors provide practical assistance to the ongoing debate on mobilizing resources to address climate change.

3.1.3 Assessing the impact of green financing on decarbonization efforts

The international community has recently focused on promoting green finance to address environmental protection, climate change, and sustainable development. Nevertheless, from an ecological standpoint, scholars have mainly evaluated the elements and forces behind green financing. Jia ( 2023 ) seeks to assess how green funding affects economies' efforts to reduce their carbon footprints, particularly in the People's Republic of China, the Russian Federation, and the United States.

The study examines green bonds as these countries' most common green finance tool for decarbonization. The report concludes that green money has not significantly affected these countries' decarbonization efforts. Even if businesses and government organizations have made strides, the study contends that further research is necessary to fully grasp how well green financing works to encourage decarbonization and how businesses and government organizations fit into this process.

The study's findings do not prove that green bond issuance reduces corporate carbon intensity. Furthermore, it is unknown if the existing green bond financing mechanism speeds the shift to a low-carbon economy. Overall, the study emphasizes the need for more investigation and assessment of green finance's efficiency in advancing decarbonization. Understanding how institutions and government organizations suit this technique is vital, as is identifying valuable tools and methods for promoting sustainable development policy.

There has been recognition of the value of green finance in tackling environmental protection, climate change, and sustainable development, but more research is needed to determine its effectiveness. Jia's analysis shows how green financing affects the decarbonization of the US, China, and Russian economies. Further research is required to identify practical strategies and tools for promoting sustainable development policies.

3.1.4 The impact of sustainable spending on investment behavior

Campbell and Sigalov ( 2022 ) explore how sustainable spending affects "reaching for yield" in their model of "reaching for yield." Although green finance or sustainable investing is not explicitly mentioned in the paper, the idea of sustainable spending aligns with the views of sustainable finance, which encourages investments that support sustainable development while still yielding financial rewards. The concept of sustainable spending may be used by investors who prioritize sustainable financing to direct their investment choices, such as investing in green initiatives or businesses with robust ESG practices. This study provides insight into how investors react to changes in interest rates and risk premiums. It does not consider how investing in green projects may affect risk-taking and has other limitations. Despite these limitations, it offers a valuable framework for understanding investors' behavior in response to changes in interest rates and risk premiums in a sustainable investing context.

3.1.5 Investor preferences and sustainable investments

Green finance is crucial for achieving Sustainable Development Goals (SDGs), as Rogelj et al. ( 2016 ) argue. They conduct two field surveys with a pension fund that grants its members a vote on its sustainable investment policy to determine whether individuals are willing to support sustainable investments even if they negatively impact their financial performance. After observing the pension fund's increased focus on sustainability, most participants still support more sustainable investments. The authors conclude that social preferences significantly influence economic decisions and propose a simple method for institutional investors to cater to the social importance of their clients. Investor willingness to invest in sustainable projects, transparency, and standardization of sustainability reporting influence green finance's effectiveness in achieving Sustainable Development Goals (SDGs). Transparency, standardization, and social equity are essential to create a sustainable and equitable future. With green finance, sustainable development projects and investments can be financed and invested, contributing to global sustainability efforts.

3.2 Green finance and sustainable development

Diverse topics and studies are covered in this section about Green Finance and Sustainable Development. Green finance is discussed as it relates to sustainable development goals, the role of financial institutions, environmental policies' impact on R&D investment, and the enhancement of climate finance. The papers emphasize the need for precise definitions and relevant studies to promote green financing and climate change mitigation. Further research into climate finance, focusing on extreme weather risks, divestment, and stranded assets, is also recommended.

3.2.1 Causal relationship between green finance and sustainable development

Wang et al. ( 2022 ) use the bootstrap rolling-window Granger causal relationship test to globally assess the causal relationship between green finance (GF) and sustainable development (SD). The outcomes of the empirical analysis indicate that GF has positive impacts on SD in various sub-periods. However, the study needs to reach a consistent conclusion on the influence of sustainable development on green finance.

Green finance has emerged as a new financial tool for promoting sustainable development, but its precise impact has yet to be proven. The study aims to fill this gap by performing a practical analysis of the effects of multiple stakeholders on SD through their participation in GF projects. The results show a dynamic causal connection between GF and SD in different subsample intervals, but the direction of this connection could be more consistent. The study suggests that policymakers promote green finance and its contribution to sustainable development through government guidance, improved GF classification and evaluation, and better information disclosure.

3.2.2 The impact of environmental policy on R&D investment

Brown et al. ( 2022 ) explore the impact of environmental policy on the research and development (R&D) investments of polluting firms. The study highlights the potential of tax policy to incentivize technological innovation towards cleaner production methods, providing evidence for the link between market-based environmental approaches and technical change.

The study suggests that further research is necessary to investigate the interaction of pollution taxes and research subsidies on technology investment decisions, the influence of other legal and institutional determinants on R&D investment, and how policy-induced investments in modern technology affect the level of noxious manufacturing emissions in high-pollution firms. In green finance, emissions taxes may encourage investment in green finance impacted this discovery emphasizes the importance of enabling investments in clean technologies, particularly within sectors that use environmentally harmful production methods. By advocating and funding the adoption of clean technologies, green finance can play a vital role in reducing the detrimental effects of pollution on the environment and fostering sustainable development.

3.2.3 Enhancing climate finance

The article by Hong et al. in 2020 highlights the significance of conducting further research in climate finance. The researchers emphasize the need for improved modeling and sharing of extreme weather risks using remote sensing and machine learning. They also stress the importance of divestment and stranded assets and how they can potentially influence the cost of capital for energy companies, leading to significant stranded asset risk. Municipal finance is also discussed, in which rating agencies consider incorporating climate change resilience measures into municipal bond ratings. As a last point, the article suggests exploring the impediments to corporate and financial innovation related to climate change, including the nature and impact of green bonds. The report emphasizes how financial economists must understand and address the risks associated with climate change and its potential implications for financial stability. As part of green finance, it is crucial to consider the effects of climate change on investments, financial stability, and innovation in the financial sector.

3.2.4 The impact of government expenditure on green economic performance

Feng et al. ( 2022 ) investigate the link between government expenditure and green economic performance in countries participating in China’s Belt and Road Initiative (BRI). The authors employ data envelopment analysis (DEA) and system GMM techniques to analyze panel data from 2008 to 2018 in selected BRI countries. The study findings indicate that government expenditure significantly impacts green economic performance, with public spending on human capital and renewable energy leading to a productive green economy. The paper also includes policy recommendations to support BRI countries in achieving their green development goals, such as allowing green infrastructure projects to attract more private green finance and investment.

The study does, however, have specific areas for improvement. For instance, because the research solely focuses on BRI countries, the conclusions cannot be generalized to other regions or nations. Moreover, the study’s DEA and GMM techniques should fully capture the relationship between government expenditure and green economic performance complexities. Nonetheless, the study contributes a valuable statistical analysis using panel data and econometric methods, and the policy recommendations provide practical implications for BRI countries and decision-makers.

3.3 The potential of impact investing for green finance

The articles in this section explore the potential of impact investing for green finance. They examine various aspects of impact investing, including the willingness of investors to accept lower financial returns for non-financial benefits, the role of institutional ownership in promoting firms' environmental and social performance, scope insensitivity in sustainable investing, and the power of institutional shareholders in driving sustainable investments.

3.3.1 Sacrificing returns for environmental and social impact in green finance

The study by Barber et al. ( 2021 ) investigates the willingness of investors to accept lower financial returns for the non-financial benefits of impact investing, particularly in dual-objective venture capital (VC) funds. The study finds that impact investors sacrifice returns, with impact funds earning 4.7 percentage points lower IRRs than traditional VC funds. The study shows that impact investors will forego up to 3.7 percentage points in expected excess IRR. The cost of capital for portfolio companies is lower for impact funds, leading to increased access to capital and growth opportunities. The findings have important implications for green finance. They suggest investors are willing to trade financial returns for positive environmental or social impact. That specific category of investors has higher WTP for such effects, which could guide the development of green finance strategies and policies.

3.3.2 The role of ownership in firms' environmental and social performance

Dyck et al. ( 2019 ) examines the relationship between institutional ownership and firms' environmental and social (E&S) performance, with implications for green finance and sustainable investment practices. Investing institutions can promote sustainable practices by pressing firms to improve their E&S records, resulting in a shift towards socially responsible investing. In addition, the study emphasizes the influence of cultural factors on economic decision-making and the potential effectiveness of green finance initiatives.

However, the study has limitations, including not considering governance practices and using proprietary E&S scores from data providers. The study provides valuable insights into the role of institutional investors in promoting E&S practices. It highlights the need for further research to explore how green finance can leverage institutional investors for sustainable business practices.

3.3.3 The impact of institutional shareholders on CSR and sustainability

Chen et al. ( 2020 ) investigate how institutional shareholders impact corporate social responsibility (CSR) and sustainability in portfolio firms. Institutional shareholders can positively influence CSR commitments, particularly in financial material categories, and generate real social impact through CSR-related proposals. The study's robust evidence suggests that institutional shareholders play a crucial role in promoting environmental responsibility and sustainable practices in businesses. The study's findings have important implications for green finance as investors increasingly demand sustainability commitments. However, the study does not explore the potential unintended consequences of institutional shareholder influence and focuses on the U.S. market. Nonetheless, the study offers practical suggestions for investors and asset managers seeking to integrate ESG factors into their investment strategies. In conclusion, institutional shareholders will become more influential in driving environmental sustainability and green finance.

3.3.4 The impact of corporate green bonds on environmental performance

Flammer's 2021 study examines the prevalence and impact of corporate green bonds, whose proceeds finance climate-friendly projects. Researchers found that green bonds are increasingly prevalent in industries where the environment is critical to firm operations. Furthermore, Flammer's analysis reveals that companies improve their environmental performance post-issuance, with higher ecological ratings and lower CO2 emissions, and experience increased ownership by long-term and green investors. The findings suggest that corporate green bonds are not merely a tool for greenwashing, as improvements in environmental performance are observed following their issuance. Overall, Flammer's study sheds light on the potential benefits of corporate green bonds for both companies and investors, as well as the importance of private governance in the green bond market and is related to the development of green finance.

3.4 Corporate social responsibility and governance

In this section, the reviewed articles study corporate social responsibility (CSR), environmental externalities, and governance. The studies reveal that the political environment, legal origins, and corporate governance drive CSR policies and practices. The articles collectively suggest that incorporating environmental considerations into CSR policies is essential for long-term financial performance and promoting sustainability, making CSR a critical aspect of green finance.

3.4.1 The influence of political environment on corporate social responsibility

Di Giuli et al.’s ( 2014 ) study examines the relationship between a company’s political environment and corporate social responsibility (CSR) policies. According to the researchers, firms with Democratic founders, CEOs, and directors, as well as those headquartered in Democratic states, tend to score higher on CSR ratings than their Republican counterparts. Moreover, Democratic-leaning firms spend about 10% more of their net income on CSR than Republican-leaning firms. However, no evidence indicates firms recover these expenditures through increased sales. The study suggests that social responsibility may benefit stakeholders. Nevertheless, it comes at the expense of firm value since higher CSR ratings are linked to lower stock returns and lower returns on assets.

This study has implications for green finance and highlights how important a company’s political environment is to drive its CSR policies. Companies with a more robust Democratic political environment tend to be more socially responsible, which could be helpful for investors seeking to identify socially responsible companies for investment purposes. The study also emphasizes the need for companies to incorporate environmental considerations into their CSR policies, especially for long-term financial performance.

3.4.2 Corporate governance and environmental externalities

In 2020, Shive et al. researched the relationship between corporate governance and environmental externalities, explicitly focusing on greenhouse gas emissions. The article focuses on the relationship between corporate governance, environmental externalities, and green finance. The research conducted by Shive and Forster ( 2020 ) reveals that private firms are less likely to pollute and incur penalties from regulatory bodies than public firms. The study also shows that mutual fund ownership and better board oversight may decrease externalities within public firms. These findings have important implications for green finance, as variables that drive differences in emissions among public firms may carry over to an international setting.

The authors discuss the potential trade-off between prosocial behavior and profitability in reducing greenhouse gas emissions. They highlight the importance of considering the long-term benefits of prosocial behavior for the firm and suggest that engaging institutional investors in addressing climate risks and promoting ESG practices may help shift the equilibrium level of prosocial behavior towards more sustainable practices. The article concludes that green finance, including ESG adoption and engagement, can effectively promote sustainable practices among firms and investors.

3.4.3 Legal origins and corporate social responsibility

Liang and Renneboog ( 2017 ) explore the relationship between legal origins and corporate social responsibility (CSR) ratings. Their paper highlights that legal sources significantly determine cross-country differences in CSR ratings. Specifically, companies from civil law countries have higher CSR ratings than those from common law countries, which the researchers argue is due to the greater emphasis on stakeholder rights and social control in civil law legal systems.

Companies from civil law countries may be more likely to prioritize environmental concerns and engage in sustainable business practices, which has implications for green finance. Additionally, companies from civil law countries may be more responsive to ecological crises, address environmental risks, and promote sustainability. Environmental, social, and governance (ESG) factors are increasingly important in green finance. While the study has limitations, such as the lack of causality and potential endogeneity issues, it provides valuable insights into the relationship between legal origins and CSR ratings. It highlights the importance of considering lawful sources in understanding a company's commitment to sustainability and environmental responsibility.

3.4.4 CSR Disclosure and Implications for green finance

Chowdhury et al. ( 2021 ) investigate the competitiveness of foreign firms listed on U.S. capital markets in providing better corporate social responsibility (CSR) disclosure and the potential for such transparency to give them a competitive advantage over their U.S. counterparts. By utilizing environmental, social, and governance disclosure scores, the study reveals that foreign firms disclose more CSR information than comparable U.S. firms, particularly in the environmental and social dimensions. Additionally, foreign stocks exhibit lower idiosyncratic volatility, better liquidity, and higher institutional ownership than equivalent U.S. stocks, potentially because of their higher level of CSR disclosure. The authors highlight the increasing importance of CSR to investors worldwide and the positive correlation between a multinational company's degree of multinationalism and corporate social performance.

The study underlines the necessity for foreign firms listed on U.S. markets to effectively communicate their CSR-related initiatives to U.S. investors to enhance their reputations, visibility, and competitiveness. However, the authors note that while foreign firms listed on U.S. markets are sufficiently transparent in disclosing their CSR activities to U.S. investors, they must also better communicate their governance-related initiatives to remain competitive. A higher level of disclosure for all three primary areas of CSR activities benefits foreign firms listed on U.S. markets.

3.4.5 CSR, social capital, and firm performance

In their study, Lins et al. ( 2017 ) examine the relationship between corporate social responsibility (CSR), social capital, and firm performance during the 2008–2009 financial crisis. During the crisis, firms with high social capital, measured by CSR intensity, outperformed firms with low social capital by at least four percentage points. Building firm-specific social capital through CSR can be considered an insurance policy that pays off when investors and the overall economy face a severe crisis of confidence. The findings also indicate that social and financial capital can be important determinants of firm performance and identify circumstances under which CSR can benefit. From a green finance perspective, the study highlights the importance of CSR activities that contribute to environmental sustainability in building social capital and fostering trust between a firm and its stakeholders.

3.4.6 Supply chain collaboration and green finance

Dai et al. ( 2021 ) emphasize the critical role of supply chain collaboration in promoting sustainable business practices, a subject closely related to green finance. The study highlights the importance of the active roles played by large corporations in their suppliers’ CSR initiatives and standards. It notes that collaborative CSR efforts between suppliers and customers improve both parties' operational efficiency and firm valuation. The study also found that customers tend to establish relationships with socially and environmentally responsible firms, influencing their suppliers' CSR practices through positive assortative matching and decision-making processes. However, the study also highlights the challenges of promoting sustainability across global supply chains, particularly in specific socio-cultural and institutional environments. Overall, the study provides valuable insights into the role of supply chain collaboration in promoting sustainable business practices, which represent an essential aspect of green finance.

3.5 ESG and sustainable investing

This section discusses the importance of ESG criteria in investment decisions and how they impact green finance. These articles emphasize the importance of impact investing and sustainable finance in achieving environmental responsibility and a sustainable future. As a result, they emphasize the potential risk of greenwashing and the need to address scope insensitivity in sustainable investing. Furthermore, they advocate for adopting cleaner technologies and market-based environmental policies. To drive green finance initiatives and promote sustainable investments, the findings have practical implications for investors, asset managers, and policymakers.

3.5.1 Insights for responsible investing and the ESG-efficient frontier

The research conducted by Pedersen et al. ( 2021 ) presents a theory that establishes a connection between the ESG scores of stocks and their ability to provide insights into firm fundamentals and influence investor preferences. Integrating ESG factors into the portfolio construction process makes it possible to enhance risk-adjusted returns and gain a framework for assessing the costs and benefits of responsible investing through the ESG-efficient frontier. This valuable tool enables investors to optimize their portfolios to attain financial and environmental objectives. Given the increasing significance of green finance, which aims to foster environmentally sustainable economic growth, the ESG-efficient frontier holds excellent relevance. However, it is worth noting that the study primarily concentrates on the financial aspects of ESG investing, potentially overlooking its broader social and environmental impacts. Nevertheless, the ESG-efficient frontier remains invaluable for investors and researchers delving into responsible investing.

3.5.2 The impact of sustainable investing on asset prices and corporate behavior

The study by Pástor et al. ( 2021 ) examines the impact of sustainable investing on asset prices and corporate behavior through an equilibrium model that considers financial objectives and ESG criteria. The study shows that green assets have lower expected returns but can outperform brown assets when positive shocks hit the ESG factor, indicating that investors may need to adopt a longer-term perspective and be willing to accept lower returns in exchange for a positive social impact. The study also demonstrates that sustainable investing can lead firms to become greener and induce more real investment by green firms and less by brown firms, thus highlighting the positive social impact of sustainable investing. The study's findings are highly relevant to green finance, as they indicate a demand for green finance products and services that cater to investors with strong ESG preferences. In addition, the study highlights the challenges associated with sustainable investing, such as adopting a longer-term perspective and balancing financial returns with social impact. Overall, the study provides valuable insights into the potential benefits and challenges associated with sustainable investing and its impact on the financial industry, corporate behavior, and the environment, thereby emphasizing the importance of considering ESG criteria in investment decisions.

3.5.3 The impact of CSR performance on market quality

Clancey-Shang and Fu ( 2022 ) investigate how the market quality diverges between high-ESG and low-ESG firms in the stock market in response to the Russia-Ukraine conflict. Using an event-study approach, the study finds that better CSR performance alleviates the market quality deterioration associated with the outbreak of the conflict for US-listed foreign firms. Such an effect is insignificant for domestic U.S. firms. The study also finds that foreign firms experience more severe market quality deterioration than their U.S. counterparts. The findings support the theories and observations that better CSR performance leads to improved market turmoil and helps alleviate the decline of the information environment at times of great political uncertainty. The study contributes to understanding the association between CSR and market quality, particularly during significant geopolitical events.

This study supports the idea that companies with strong ESG practices and disclosure may be more attractive to investors seeking to invest in sustainable and environmentally friendly companies. This is particularly relevant given the increasing interest in green finance and sustainable investing, whereby investors increasingly seek to invest in companies that prioritize environmental and social responsibility. Companies prioritizing ESG practices and disclosure may benefit from increased investor demand and improved stock market performance.

3.5.4 Externalities of financial constraints

The study by Xu and Kim ( 2022 ) examines the impact of financial constraints on corporate environmental policies and finds that firms facing such conditions tend to increase their toxic emissions due to weighing the costs of abatement against potential legal liabilities. The study highlights the negative externalities of financial constraints, such as environmental pollution and public health costs, and recommends implementing non-random auditing policies to incentivize firms to adopt environmentally sustainable practices. This study is relevant to green finance, which aims to promote sustainable development by providing incentives for environmentally sustainable practices, even in the face of financial constraints. However, the study's limitations include potential data representativeness issues and a need to consider probable innovations in environmentally sustainable practices.

3.5.5 Banks' influence on corporate ESG policies

The study by Houston and Shan ( 2022 ) explores the connection between banking relationships and corporate ESG policies. The study reveals that banks are crucial in promoting ESG policies among their borrowers. According to the study, those who borrow from banks with better ESG profiles are more likely to improve their ESG performance over time. Furthermore, banks' influence is concentrated on environmental and social issues that focus the spotlight on lenders, leading to severe reputational and financial consequences. These findings have significant implications for green finance, indicating that banks' ESG policies may influence lending decisions toward companies with similar ESG profiles. This research highlights the role of banks in promoting sustainable finance practices. Companies prioritizing ESG considerations may have a competitive advantage in accessing green finance from banks.

3.5.6 ESG preferences and stock performance

The study by Bansal et al. ( 2022 ) focuses on socially responsible investing (SRI) stocks and their performance during different economic periods. The researchers find that high-rated SRI stocks outperform low-rated ones during favorable economic conditions and underperform during unfavorable conditions, indicating that investor demand for SRI is wealth dependent. This study's findings provide insights into how investors' ESG preferences can impact the market, leading to variations in abnormal returns. This information may be relevant to investors who prioritize ESG factors in their investment choices and help to guide their decisions.

Socially responsible investing (SRI) is one aspect of sustainable investing that considers environmental, social, and governance (ESG) factors in investment decision-making. Investors who prioritize ESG factors in their investment choices may be interested in the findings of this article as it provides insights into the performance of SRI stocks during different economic times. Additionally, the report suggests that demand-driven preference shifts toward SRI may be a factor in the variation of abnormal returns, indicating that investors' ESG preferences can influence the market. Therefore, understanding the market demand for sustainable investments helps to guide investors’ decisions and impacts the flow of capital toward more sustainable investments.

3.5.7 Constructing climate change hedge portfolios

Engle et al. ( 2020 ) introduce a novel approach to constructing climate change hedge portfolios using the textual analysis of newspapers to extract climate news innovations and third-party ESG scores to model climate risk exposures. This methodology could help investors manage climate risk in their portfolios and invest in companies better prepared to address climate change. The study suggests that more and better-quality data improve the methodology and encourage exploration by adding more assets to hedge portfolios. The study also highlights the importance of developing alternative definitions of climate change risks to better manage diverse types of climate risks. This methodology provides valuable insights for investors seeking to manage climate risk exposure in their portfolios. It highlights the potential of textual analysis and ESG scores to build effective climate change hedge portfolios in green finance.

3.6 Climate change and risk management

The papers discussed in this section shed light on the critical intersection of climate change and risk management, emphasizing the implications of environmental risks for financial decision-making. These articles cover diverse topics, including the importance of green finance, climate risk disclosure for institutional investors, and the relationship between abnormal temperatures, climate change awareness, investor behavior, and economic activity. The findings underscore the need for environmentally conscious investing and effective communication strategies to increase public awareness and support for climate policies. Evaluating climate risk and political uncertainty is crucial when making investment decisions, particularly for fossil fuel companies facing financial troubles due to stranded assets. These studies provide valuable insights into the role of finance in addressing climate change and promoting sustainable economic growth, underscoring the urgency of mitigating environmental risks.

3.6.1 The impact of abnormal local temperatures on climate change and markets

The study by Choi et al. ( 2020 ) explores the links between abnormal local temperatures, climate change awareness, investor behavior, and economic activity. Analyzing data from seventy-four cities, the study finds that people's attention to climate change increases during abnormally warm months, mainly when the temperature is in the city's top quintile. Furthermore, investors revise their beliefs about global warming during hot months, with stocks with lower climate sensitivities outperforming those with higher climate sensitivities. The study suggests that abnormal local temperatures serve as “wake-up calls” for investors to focus on climate change risks. Public awareness and education on climate risk are essential to increase the efficacy of climate policies and campaigns. The study's findings have implications for investors and policymakers, as the study suggests a shift towards more environmentally conscious investing and highlights the importance of effective communication strategies to increase public awareness and support for climate policies.

3.6.2 The impact of green finance on low-carbon energy, sustainable development

Ionescu ( 2021 ) presents a well-executed empirical study that evaluates the impact of green finance on low-carbon energy, sustainable economic development, and climate change mitigation during the COVID-19 pandemic. The study uses data from reputable sources such as NGFS and the UN and analyzes the transition to a low-carbon sustainable economy through various analyses and estimates.

The study presents a valuable statistical data analysis, including descriptive statistics compiled from the completed surveys. However, more information on the limitations and areas for improvement in future research could be provided to improve the study. Additionally, the study would benefit from a more detailed explanation of the weighting variables used in the data to aid readers' understanding.

Explaining the research model and methods used to analyze and estimate the data in greater detail would also enhance the study’s transparency and replicability. Also, the study should detail how the findings may affect policy and practice. Readers can apply the results in real-world scenarios to mitigate climate change and promote sustainable economic development. Lastly, the study highlights future opportunities for green finance, but it can be improved by providing stakeholders with recommendations on taking advantage of them.

Ionescu’s study provides a valuable empirical analysis of the impact of green finance on low-carbon energy, sustainable economic development, and climate change mitigation during the COVID-19 pandemic. The study uses data from reputable sources and provides a statistical analysis; however, it could be enhanced by providing more excellent details concerning the research model and methods, implications and limitations of the findings, and the weighting variables used on the data.

3.6.3 Impact of climate risk beliefs

Bakkensen and Barrage ( 2022 ) highlight the impact of climate risk beliefs on coastal housing markets and the implications for green finance. The study reveals a significant prevalence of flood risk misperceptions among coastal residents, which leads to overvalued coastal housing prices. The paper suggests that accurate and transparent information about climate risks is critical for efficiently pricing coastal assets, and green finance can support such information disclosure and improve market efficiency.

Furthermore, the study underscores the need for policies incentivizing climate risk mitigation and adaptation. Green finance supports these policies by financing low-carbon and resilient infrastructure projects and developing innovative financial instruments promoting climate resilience. Overall, the paper highlights the complex interplay between climate risk beliefs, market dynamics, and policy outcomes and emphasizes the role of green finance in addressing these challenges.

3.6.4 Navigating environmental and economic sustainability through green transformation risks and fostering finance

Green finance, the strategic integration of environmental considerations into financial decisions, is a pivotal instrument for advancing sustainability (Wang et al. 2022 ). This critical shift entails embracing transformation risks, encompassing uncertainties linked to policy shifts, technological disruptions, market dynamics, and regulatory adjustments (Wang et al. 2022 ) (Chenet et al. 2021 ). By harmonizing green finance with supportive policies, the potency of sustainable initiatives can be significantly elevated (Chen et al. 2023 ). The research underscores the imperative for financial markets to duly account for climate transition risks and opportunities (Chenet et al. 2021 ). Addressing transformation risks through coordinated policy frameworks emerges as a paramount strategy for fostering triumphant, enduring environmental and economic metamorphosis (Chen et al. 2023 ) (Xiong et al. 2023 ).

Schumacher et al.'s ( 2020 ) article delves into the role of sustainable finance and investment in Japan, particularly its potential to mitigate escalating climate risks. The study analyzes the symbiotic relationship between sustainable finance and climate risk mitigation, spotlighting asset pricing dynamics within sustainable equity portfolios and their ramifications for the financial sector. Although the article refrains from providing an explicit outline of transformation risks, it systematically assesses the opportunities and obstacles to sustainable investments within Japan's financial landscape amid climate risks. This exploration underscores the invaluable contribution of sustainable finance to curtailing climate risks and nurturing a more resilient financial framework.

Within the article, various climate-related risks—from physical to transitional—emanate within sustainable finance and the journey toward a zero-carbon economic trajectory. These risks encompass disclosures concerning climate-related risks, exposure to physical climate hazards, and climate-related transitional risks stemming from regulatory reactions, technological advancements, and evolving societal dynamics. Transitional risks arising during the transition to low-carbon economies can lead to stranded assets, affecting sectors such as coal power, manufacturing, and agriculture. Additionally, the Japanese economy faces risks from imported transitional effects due to its reliance on foreign commodities. Legal and fiduciary obligations tied to climate risks are prominently highlighted, with boards compelled to factor in these risks. The Japanese financial sector, owing to its holdings, is subject to policy, legal, technological, market, and reputational risks. This extensive array of risks underscores the complexities and deliberations in aligning financial systems with sustainability objectives.

3.7 Renewable energy and sustainable economic growth

The papers under discussion in this section highlight the critical role of green finance in fostering sustainable economic growth and addressing climate change. Specifically, they emphasize how large investors, such as the Big Three asset managers, can leverage their influence to encourage portfolio companies to reduce carbon emissions, thereby highlighting the potential of aligning financial incentives with sustainable outcomes. Furthermore, the paper stresses the need for active monitoring and engagement with portfolio companies on environmental issues to ensure the success of green financing initiatives.

While recognizing Green Finance's opportunities, the paper also highlights its implementation challenges. There is a need for more comprehensive and comparable data on green financing activities across different regions and industries. We gain valuable insights into how green finance can contribute to sustainable economic development and climate mitigation. The public and private sectors can benefit from research and efforts to promote green finance.

3.7.1 The influence of large investors on carbon emissions

The article by Azar et al. ( 2021 ) contributes to the historical development of green finance by showing how large investors such as the Big Three can influence portfolio companies to reduce their carbon emissions, which is crucial for sustainable economic growth. Green finance emphasizes the importance of monitoring portfolio companies' environmental performance and engaging with them. This study proves that green finance can mitigate climate change and facilitate sustainable economic growth.

The study by Azar et al. ( 2021 ) shows that the Big Three's engagement efforts with individual firms are related to CO2 emissions, and they focus on large firms in which they hold a significant stake. Low carbon emissions are also associated with higher ownership among the Big Three. To achieve sustainable economic growth, large investment institutions such as the Big Three can significantly impact firms' efforts to reduce carbon emissions. The study highlights the potential financial incentives for the Big Three to engage with firms on environmental issues, including the belief that reducing CO2 emissions enhances the value of their portfolios, attracting or retaining investment clients who care about the environment, and climate risk implications for portfolio firms.

The study's authors warn that their data do not prove that corporate CO2 emissions are directly affected by the Big Three. It will take more research to establish a causal connection. Additionally, the researchers point out that the Big Three are not necessarily monitoring society at the optimal level. However, the analysis shows that green financing can help enhance long-term economic growth and slow global warming.

3.7.2 Advancing green finance, sustainability, and carbon emission risk for economic growth

Green finance is crucial in promoting sustainable economic growth and mitigating climate change, and renewable energy, CO2 emissions, and research and development are essential factors in advancing green financing efforts. However, green finance research also has limitations and areas for improvement.

In terms of the theoretical framework, more research is needed to understand the mechanisms through which financial incentives can be aligned with sustainability outcomes. Green finance in different regions and industries also requires more comprehensive and comparable data on green financing activities across other countries and sectors. Finally, in terms of green finance and sustainability, there is a need for more research on the social impact of green financing and the potential trade-offs and unintended consequences of green financing initiatives.

Bolton and Kacperczyk ( 2021 ) provide crucial evidence to investors already demanding compensation for exposure to carbon emission risk. The findings might not apply to businesses in other nations, and the link between carbon emissions and stock returns is only sometimes causative. Additionally, not all investors may be accounting for carbon risk, underscoring the significance of enlightening investors about the hazards of climate change, and urging them to consider the long-term risks associated with carbon-intensive equities. The report emphasizes the value of ongoing analysis and initiatives to advance sustainability and green finance.

3.7.3 Green finance, geopolitical risk, and chinese investments in renewable energy

Li et al. ( 2022 ) explain how geopolitical risk, volatility, and green finance affect Chinese investments in renewable energy sources. To grasp the essence of the geopolitical risk concept, this review turns to Caldara and Iacoviello's work in 2022 . They define geopolitical risk as the interplay of threats, realizations, and escalations of adverse geopolitical events. This term encompasses conflicts, terrorism, and tensions among states and political actors, affecting the stability of global relations. Caldara and Iacoviello's insights underpin the construction of an index that quantifies these risks by analyzing news articles. The Geopolitical Risk (GPR) index quantifies the prevalence of articles discussing adverse geopolitical events and threats every month. Guided by the definition of geopolitical risk and insights from geopolitical literature, this curated vocabulary captures various dimensions. This index is a valuable tool for researchers to dissect and analyze the nuanced components of geopolitical risk, offering insights into different facets and allowing for detailed exploration at monthly and daily frequencies.

Li et al.'s study showcases, environmental financing (in the form of ecological bonds) and green laws like environmental taxes have a significant and beneficial impact on encouraging investment in renewable energy sources in China. The report emphasizes the need to support green businesses in China to stimulate long-term investment in renewable energy sources. The study also demonstrates that green rules mitigate the link between green funding and investments in renewable energy. The study uses a variety of benchmarks to analyze micro- and macro-level data thoroughly and uses regression estimation techniques.

However, the study's generalizability is constrained because it exclusively focuses on China, and the findings might only apply to some nations or locations. The analysis only analyzes the brief period from 2015 to 2020, which may not reflect long-term trends and changes in the link between green finance, volatility, geopolitical risk, and investments in renewable energy sources. The research may only have considered pertinent variables that might affect investments in renewable energy sources, such as technological advances, the state of the economy, and changes in legislation.

The authors could consider extending the research period to capture long-term trends and changes in the association between volatility, geopolitical risk, and investments in renewable energy sources to enhance the analysis. The authors may broaden the study's scope to incorporate more nations or areas to make the results more universally applicable. Finally, to address potential biases and enhance the accuracy of the findings, the authors may consider using various data sources and methodologies.

3.8 Oil price, trade and green finance

This section explores two studies that provide valuable insights into the relationship between green finance and critical economic factors. These studies contribute to understanding the interplay between oil price fluctuations, labor investment, trade openness, green finance, and natural resource utilization. They underscore the importance of considering environmental factors and the need for comprehensive analysis and contextual information in examining these relationships. The findings highlight the potential of green finance in promoting sustainable investment practices and improving natural resource utilization while also calling for further research and the integration of green finance and trade openness to enhance sustainability.

3.8.1 Oil price fluctuations and labor investment

Liu et al. ( 2022 ) examine the impact of the 2014–2015 oil price decline on Chinese firms' labor investments. They find that firms in industries with significant negative oil price risk exposure increased their employment levels by 16.4% after the oil price plummeted. Oil price fluctuations are essential for the Chinese government and its enterprises when making economic decisions related to the labor force. This study illustrates the need to consider the impact of oil prices on firms' labor investments when making investment decisions, which could be relevant to green finance. As well as promoting sustainable investment, green finance can facilitate the transition to a low-carbon economy by incorporating environmental factors such as oil prices.

3.8.2 Trade openness and natural resource utilization

The study by Wu ( 2022 ) provides valuable insights into the relationship between trade openness, green finance, and natural resource utilization in China. The vector autoregression (VAR) model analyzes data from 1981 to 2020. The findings reveal that natural resource use significantly impacts trade openness and green financing, and coal and oil consumption demonstrate particularly negative influences on green finance. Furthermore, the study suggests that gas consumption may promote sustainable trade. However, the study could benefit from providing more contextual information about the nation being analyzed and considering other factors that may influence trade openness and green financing.

Moreover, the study's generalizability could be enhanced by extending the analysis to other nations or regions to establish the universal relationship between trade openness and green financing. Furthermore, while the study suggests that green finance does not significantly impact natural resource use, it recommends that green funding be made more practical if it aligns more closely with trade openness. The study could elaborate further on how green finance and trade openness can be better integrated to improve natural resource utilization and sustainability.

It provides valuable insight into the relationship between Chinese trade openness, green financing, and natural resource utilization. A more detailed context and consideration of other factors that may affect this relationship would enhance the generalizability of the study. Extending it to other nations or regions would increase its generalizability.

4 Future directions in green finance

4.1 recommendations for expanding the scope based on literature review.

We propose recommendations for expanding the research scope and exploring critical areas of investigation in this research review to enhance our understanding of green finance and its role in addressing climate change and decarbonization.

Research emerging markets' efforts and challenges in promoting green finance, identifying strategies to attract sustainable investments, and supporting climate-related projects.

Research innovative green financial instruments, evaluating their effectiveness in mobilizing capital for sustainable projects and promoting environmental sustainability.

Analyze how technology, including fintech and blockchain, can enhance transparency, efficiency, and accessibility in sustainable investments by advancing green finance.

Analyze the role of institutional investors in driving green finance initiatives, including their allocation strategies and ESG integrations.

Discover how green finance initiatives contribute to sustainable development and social inclusion, ensuring benefits reach marginalized communities.

Assess how green finance investments enhance resilience to climate change impacts through climate adaptation and mitigation projects.

Evaluating long-term financial returns, job creation, and economic growth of green finance initiatives.

Identify and overcome barriers to green finance adoption, proposing strategies for overcoming obstacles and accelerating sustainable financial adoption.

Compare Green Finance Initiatives Globally: Conduct a comparative analysis of green finance initiatives in different countries, sharing best practices and success factors to foster cross-border collaboration.

Research on the role of NGOs and civil society in green finance advocacy and environmental sustainability.

4.2 Exploring future imperatives

Informed by current research and its inherent gaps, this exploration delves into the terrain of future imperatives.as the blow suggestion:

Fostering Responsible Digital Transformation : As the financial sector embraces technological advancements like fintech and blockchain, there exists a pressing necessity to ensure that these innovations harmonize with the principles of green finance. Considering current research trends, an avenue of exploration lies in investigating how digital solutions can magnify the transparency and efficiency intrinsic to sustainable investments. Simultaneously, it is imperative to avert inadvertent environmental repercussions, notably excessive energy consumption and the proliferation of electronic waste.

Propelling Green Finance in Developing Economies : While nowadays, research in the green finance narrative briefly seems to pay attention to emerging markets, a more in-depth exploration within the precincts of the ongoing research process is indispensable. Unraveling the intricacies of economies' specific challenges while implementing green finance initiatives becomes paramount. These regions' distinctive socio-economic frameworks, intricate regulatory mazes, and labyrinthine financial architectures necessitate bespoke strategies that entice sustainable investments and support climate-oriented endeavors.

Weaving the Circular Economy Paradigm : Green finance stands poised as a pivotal force in shepherding the transition from a linear economic model to the regenerative circular paradigm. Embedded within the ongoing research process is the exploration of how financial tools and incentives can serve as catalysts for adopting circular economy practices—ranging from recycling to reutilization and waste minimization. This trajectory of inquiry unveils a novel avenue of exploration.

Ensuring the Endurance of Green Financial Instruments : While recent studies briefly acknowledge innovative green financial instruments, an ongoing research process could venture deeper into the terrain of their long-term viability. The focus here lies in deciphering how these instruments can dynamically adapt to the shifting currents of market conditions, technological advancements, and evolving environmental priorities—all while effectively upholding the mantle of sustainability.

Confluence of Biodiversity Preservation and Financial Dynamics : While the studies in this review focus primarily on carbon neutrality and climate dynamics, an intriguing domain to probe within the ongoing research process lies at the crossroads of green finance and biodiversity conservation. There lies an untapped potential to scrutinize how financial mechanisms can emerge as drivers that incentivize endeavors to safeguard and restore ecosystems, thereby safeguarding biodiversity and propagating sustainability.

Advancing Climate Equity through Green Finance : Imprinting the seal of priority upon marginalized and vulnerable communities within the ambit of green finance initiatives underscores its essence. The perspectives of current research in the green finance scope research process must pivot toward elucidating how the architecture of climate justice can be seamlessly integrated into the fabric of green finance projects, ensuring the just and equitable distribution of benefits.

Catalyzing Behavioral Change via Financial Education : The propagation of green finance necessitates a paradigm shift in individual and institutional behaviors. Today research in sustainability and green finance can delve into the efficacy of financial education programs in disseminating awareness about green finance, sculpting decision-making paradigms, and nurturing a cultural ethos steeped in sustainability.

Unveiling Ethical Considerations in Impact Investment : The potential ethical conundrums that linger within the domain of impact investing warrant comprehensive exploration. As part of the ongoing research process, delving into the ethical dilemmas that unfurl when investors accord primacy to non-financial gains presents an opportunity to navigate the delicate equilibrium between social and financial returns, all while upholding the tenets of ethical integrity.

4.3 Recommendations for expanding the scope based on keywords analysis

Based on the analysis of the keywords presented in Fig. 4 , it is evident that various avenues for future research exist in this domain. Based on the keyword analysis of the paper, the following recommendations can be made:

The government, financial institutions, and businesses should prioritize funding for environmentally friendly projects to combat climate change and achieve carbon neutrality.

Establish robust regulatory frameworks that facilitate green finance and integrate carbon–neutral practices. Clear and supportive policies will foster the growth of sustainable finance.

Encourage the diversification of funding sources for climate-related projects, including the Green Climate Fund, to mitigate risks associated with conventional finance and attract more investments.

The fourth action is to conduct further research to understand better the effectiveness of green financing and its impact on decarbonization. This will help make better decisions and foster innovation in the field.

The emphasis must be placed on social equity and transparency in green finance initiatives. We should consider social preferences and the public's involvement when shaping financial practices.

Investing decisions should consider Environmental, Social, and Governance (ESG) factors to bolster risk-adjusted returns and promote responsible investing.

Financial institutions and industries can anticipate and mitigate potential losses related to environmental factors by evaluating and communicating climate risks and political uncertainties.

Aim to encourage impact investing, where investors accept lower financial returns for non-financial benefits. Institutional ownership can influence companies to improve their environmental and social performance.

Promote investments in renewable energy sources to achieve sustainable economic growth. Renewable energy projects contribute to reducing carbon emissions and advancing sustainability.

Policymakers and investors need to recognize the impact of geopolitics on green finance and sustainable development. Global cooperation and trade openness are essential for addressing sustainability challenges.

For sustainability projects to succeed, stakeholders, including financial institutions, governments, and the public, should work together to support green finance initiatives.

Make sure that comprehensive and comparable data are available on green financing activities. Access to accurate data will enable policy formulation and decision-making.

A network analysis of the primary subgroup of keywords

The original figure file with high resolution will be available upon request

Our understanding of green finance and its role in promoting sustainable development can be advanced by implementing these recommendations and broadening the scope of research.

5 Conclusion

This comprehensive review indicates that green finance is crucial to advancing sustainable development and combating environmental issues. The examined literature underscores the importance of substantial investments in sustainable and low-carbon initiatives and the need for robust regulatory frameworks to facilitate green financial availability and the integration of carbon–neutral practices.

The reviewed studies highlight the positive impact of green financing on decarbonization efforts and call for further research to enhance our understanding of its effectiveness. The literature also explores the intersection of climate change and risk management, the impact of investor preferences on sustainable investments, and the significance of environmental, social, and governance (ESG) criteria in investment decisions. Green finance promotion involves a variety of suggestions. Enhancing the regulatory framework for green finance through incentives, regulations, and knowledge sharing is essential. It is possible to improve climate finance strategies by analyzing the benefits of carbon–neutral practices in green finance and evaluating institutions like the Green Climate Fund. In addition, it is essential to examine the impact of green financing on decarbonization efforts in various countries and the impact of sustainable spending on investment decisions.

Furthermore, essential considerations include integrating ESG criteria into investment decisions, addressing implementation challenges, and improving data collection in green financing activities. Supporting green finance, sustainable economic growth, and environmental risk mitigation requires collaboration, stakeholder engagement, and policy measures. This review will give investors, policymakers, and researchers valuable insights into promoting sustainable investments and driving green finance initiatives. The potential for green finance to foster sustainable economic development can be realized when financial incentives are aligned with sustainable outcomes, environmental issues are actively monitored, and ecological policies are based on market forces.

Al Mamun, M., S. Boubaker, and D.K. Nguyen. 2022. Green finance and decarbonization: evidence from around the world. Finance Research Letters 46: 102807.

Google Scholar

Amighini, A., P. Giudici, and J. Ruet. 2022. Green finance: An empirical analysis of the Green Climate Fund portfolio structure. Journal of Cleaner Production 350: 131383.

Aramonte, S., and A. Zabai. 2021. Sustainable finance: trends, valuations, and exposures .

Azar, J., M. Duro, I. Kadach, and G. Ormazabal. 2021. The big three and corporate carbon emissions around the world. Journal of Financial Economics 142 (2): 674–696.

Azarow, R.C., E. Walsh, S. Grey, and P. Nabhan. 2021. ESG and Banking: The Disclosure Debate. Bank. Law J 138: 554–561.

Bakkensen, L.A., and L. Barrage. 2022. Going underwater? Flood risk belief heterogeneity and coastal home price dynamics. The Review of Financial Studies 35 (8): 3666–3709.

Bansal, R., D. Wu, and A. Yaron. 2022. Socially responsible investing in good and bad times. The Review of Financial Studies 35 (4): 2067–2099.

Barber, B.M., A. Morse, and A. Yasuda. 2021. Impact investing. Journal of Financial Economics 139 (1): 162–185.

Bhatnagar, M., S. Taneja, and E. Özen. 2022. A wave of green start-ups in India—The study of green finance as a support system for sustainable entrepreneurship. Green Finance 4 (2): 253–273.

Bolton, P., and M. Kacperczyk. 2021. Do investors care about carbon risk? Journal of Financial Economics 142 (2): 517–549.

Brown, J.R., G. Martinsson, and C. Thomann. 2022. Can environmental policy encourage technical change? Emissions taxes and R&D investment in polluting firms. The Review of Financial Studies 35 (10): 4518–4560.

Caldara, D., and M. Iacoviello. 2022. Measuring geopolitical risk. American Economic Review 112 (4): 1194–1225.

Campbell, J.Y., and R. Sigalov. 2022. Portfolio choice with sustainable spending: a model of reaching for yield. Journal of Financial Economics 143 (1): 188–206.

Cevik, S., and J.T. Jalles. 2022. This changes everything: Climate shocks and sovereign bonds*. Energy Economics 107: 105856.

Chen, T., H. Dong, and C. Lin. 2020. Institutional shareholders and corporate social responsibility. Journal of Financial Economics 135 (2): 483–504.

Chen, M., L. Song, X. Zhu, Y. Zhu, and C. Liu. 2023. Does Green Finance Promote the Green Transformation of China’s Manufacturing Industry? Sustainability 15 (8): 6614. https://doi.org/10.3390/su15086614 .

Article Google Scholar

Chenet, H., J. Ryan-Collins, and F. Van Lerven. 2021. Finance, climate-change and radical uncertainty: towards a precautionary approach to financial policy. Ecological Economics 183: 106957. https://doi.org/10.1016/j.ecolecon.2021.106957 .

Choi, D., Z. Gao, and W. Jiang. 2020. Attention to global warming. The Review of Financial Studies 33 (3): 1112–1145.

Chowdhury, R.H., C. Fu, Q. Huang, and N. Lin. 2021. CSR disclosure of foreign versus US firms: Evidence from ADRs. Journal of International Financial Markets, Institutions and Money 70: 101275.

Clancey-Shang, Danjue and Fu, Chengbo, CSR Disclosure, Political Risk and Market Quality: Evidence from the Russia-Ukraine Conflict (July 31st, 2022). Available at SSRN: https://dx.doi.org/10.2139/ssrn.4181022 .

Dai, R., H. Liang, and L. Ng. 2021. Socially responsible corporate customers. Journal of Financial Economics 142 (2): 598–626.

Di Giuli, A., and L. Kostovetsky. 2014. Are red or blue companies more likely to go green? Politics and corporate social responsibility. Journal of Financial Economics 111 (1): 158–180.

Dyck, A., K.V. Lins, L. Roth, and H.F. Wagner. 2019. Do institutional investors drive corporate social responsibility? International evidence. Journal of Financial Economics 131 (3): 693–714.

Edmans, A., and M. Kacperczyk. 2022. Sustainable finance. Review of Finance 26 (6): 1309–1313.

Engle, R.F., S. Giglio, B. Kelly, H. Lee, and J. Stroebel. 2020. Hedging climate change news. The Review of Financial Studies 33 (3): 1184–1216.

Feng, H., Z. Liu, J. Wu, W. Iqbal, W. Ahmad, and M. Marie. 2022. Nexus between government spending’s and green economic performance: Role of green finance and structure effect. Environmental Technology & Innovation 27: 102461.

Flammer, C. 2021. Corporate green bonds. Journal of Financial Economics 142 (2): 499–516.

Goel, R., D. Gautam, and M. F. M. Natalucci. 2022. Sustainable finance in emerging markets: evolution, challenges, and policy priorities (No. 2022–2182). IMF Working Paper No. 2022/182. Retrieved from: https://www.imf.org/-/media/Files/Publications/WP/2022/English/wpiea2022182-print-pdf.ashx .

Hong, H., G.A. Karolyi, and J.A. Scheinkman. 2020. Climate finance. The Review of Financial Studies 33 (3): 1011–1023.

Houston, J.F., and H. Shan. 2022. Corporate ESG profiles and banking relationships. The Review of Financial Studies 35 (7): 3373–3417.

Ionescu, L. 2021. Leveraging green finance for low-carbon energy, sustainable economic development, and climate change mitigation during the COVID-19 pandemic. Review of Contemporary Philosophy 20: 175–186.

Jagannathan, R., A. Ravikumar, and M. Sammon. 2017. Environmental, social, and governance criteria: Why investors are paying attention (No. w24063). NBER Working Paper Series No. 24063. Retrieved from: http://www.nber.org/papers/w24063 .

Jia, Q. 2023. The impact of green finance on the decarbonization of the economies: An analysis of the United States’, China’s, and Russia’s current agenda. Business Strategy and the Environment 32 (1): 110–119.

Khatibi, F.S., A. Dedekorkut-Howes, M. Howes, and E. Torabi. 2021. Can public awareness, knowledge and engagement improve climate change adaptation policies? Discover Sustainability 2: 1–24.

Kong, F. 2022. A better understanding of the role of new energy and green finance to help achieve carbon neutrality goals, with particular reference to China. Science Progress, 105(1). https://doi.org/10.1177/00368504221086361 .

Li, Z., T.H. Kuo, W. Siao-Yun, and L.T. Vinh. 2022. Role of green finance, volatility, and risk in promoting the investments in Renewable Energy Resources post-covid-19. Resources Policy 76: 102563.

Liang, H., and L. Renneboog. 2017. On the foundations of corporate social responsibility. The Journal of Finance 72 (2): 853–910.

Lins, K.V., H. Servaes, and A. Tamayo. 2017. Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance 72 (4): 1785–1824.

Liu, X., S. Li, C. Fu, X. Gong, and C. Fan. 2022. The oil price plummeted in 2014–2015: Is there an effect on Chinese firms' labour investment? International Journal of Finance & Economics. 1–18. https://doi.org/10.1002/ijfe.2715 .

NACI, S., 2021. Green and sustainable finance, EPRS: European Parliamentary Research Service. Belgium. Retrieved from https://policycommons.net/artifacts/1426541/green-and-sustainable-finance/2040983/ on 12 Jul 2023. CID: 20.500.12592/3594zr.

Pástor, Ľ, R.F. Stambaugh, and L.A. Taylor. 2021. Sustainable investing in equilibrium. Journal of Financial Economics 142 (2): 550–571.

Pedersen, L.H., S. Fitzgibbons, and L. Pomorski. 2021. Responsible investing: The ESG-efficient frontier. Journal of Financial Economics 142 (2): 572–597.

Radu, A.L., M.A. Scrieciu, and D.M. Caracota. 2013. Carbon footprint analysis: Towards a projects evaluation model for promoting sustainable development. Procedia Economics and Finance 6: 353–363.

Rogelj, J., M. Den Elzen, N. Höhne, T. Fransen, H. Fekete, H. Winkler, and M. Meinshausen. 2016. Paris Agreement climate proposals need a boost to keep warming well below 2 C. Nature 534 (7609): 631–639.

Schumacher, K., H. Chenet, and U. Volz. 2020. Sustainable finance in Japan. Journal of Sustainable Finance & Investment 10 (2): 213–246.

Shive, S.A., and M.M. Forster. 2020. Corporate governance and pollution externalities of public and private firms. The Review of Financial Studies 33 (3): 1296–1330.

Starks, L.T. 2021. Environmental, social, and governance issues and the financial analysts journal. Financial Analysts Journal 77 (4): 5–21.

Wang, K.H., Y.X. Zhao, C.F. Jiang, and Z.Z. Li. 2022. Does green finance inspire sustainable development? Evidence from a global perspective. Economic Analysis and Policy. 75: 412–426.

Wu, H. 2022. Trade openness, green finance, and natural resources: A literature review. Resources Policy 78: 102801.

Xiong, X., Y. Wang, B. Liu, W. He, and X. Yu. 2023. The impact of green finance on the optimization of industrial structure: Evidence from China. PLOS ONE, 18(8). https://doi.org/10.1371/journal.pone.0289844 .

Xu, Q., and T. Kim. 2022. Financial constraints and corporate environmental policies. The Review of Financial Studies 35 (2): 576–635.

Download references

Author information

Authors and affiliations.

School of Business, University of Northern British Columbia, Prince George, Canada

Chengbo Fu & Mansoor Pirabi

Asper School of Business, University of Manitoba, Winnipeg, Canada

You can also search for this author in PubMed Google Scholar

Contributions

Chengbo Fu- Formal analysis; Writing—original draft preparation; Writing—review and editing; Validation. Lei Lu- Conceptualization; Methodology; Literature Review; Supervision. Mansoor Pirabi-Literature Review; Data Curation; Formal Analysis; Writing—original draft preparation; Writing—review and editing.

Corresponding author

Correspondence to Chengbo Fu .

Ethics declarations

Competing interests.

The authors certify that they have NO affiliations with or involvement in any organization or entity with any financial interest in the subject matter or materials discussed in this manuscript.

Additional information

Publisher's note.

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ .

Reprints and permissions

About this article

Fu, C., Lu, L. & Pirabi, M. Advancing green finance: a review of sustainable development. DESD 1 , 20 (2023). https://doi.org/10.1007/s44265-023-00020-3

Download citation

Received : 01 August 2023

Revised : 06 September 2023

Accepted : 15 September 2023

Published : 21 October 2023

DOI : https://doi.org/10.1007/s44265-023-00020-3

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

Green finance
Sustainable development
Climate change
Carbon neutrality
Impact investing
Green climate fund
Regulatory frameworks
Find a journal
Publish with us
Track your research

IMAGES

(PDF) Research Paper Go green Organic a Sustainable Business Model
(PDF) Call for Papers
38+ Research Paper Samples
Green Management for Eco-Friendly Business Free Essay Example
Research Paper On Green Marketing
Green Computing Research Project Paper Example

VIDEO

Ditch the Paper Straw: Examples of Green Supply Chains in Action
Comparative Case Study of Green Energy Company
FY MBA SEM-2 C25 BUSINESS RESEARCH PAPER MBA 125 QUESTION PAPER 2014
Greening Business
Discover Business Premium Collection
Why Companies Should Highlight Their Green Business Strategy and Champion Sustainability

COMMENTS

(PDF) GREEN BUSINESS: CHALLENGES AND PRACTICES
The paper deals with the relatively new worldwide trend of adding a "green" slant to business. The purpose of the research was twofold: firstly, to clarify the definition of "green business ...
(Pdf) an Analytical Study of Green Business Practices in India With
OBJECTIVES 1. To study the importance and need of Green business practices in India. 2. The paper studies and compares various Indian companies where green business practices are applied and performance of various companies on the scale of efficiency in relation with green business practices. RESEARCH METHODOLOGY 1.
What are the drivers and barriers for green business ...
Table 1 concisely summarizes selected research papers by authors revealing the motivations for implementing green business practices, most similar to our own, many of which also employ survey methods. While internal motivations are rather consistently found to be a key driver for green business practice adoption across studies, the results ...
A systematic review of sustainable business models: Opportunities
The stakeholder role is critical in value creation for sustainable business practice in CE. Cluster 2 (Green): Challenges in developing SBMs: Preghenella and Battistella [34 ] "Exploring business models for sustainability: A bibliographic investigation of the literature and future research directions" 2021: Business strategy and the ...
Full article: Green entrepreneurship in challenging times: a
2. Literature review. According to OECD, 'green growth means fostering economic growth and development, while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies' (OECD, Citation 2015).In this context, green SMEs are the ones that 'contribute to the protection of the climate, environment, and biodiversity through their ...
Green and sustainable business models: historical roots, growth
Over the last two decades, green and sustainable business models (GnSBMs) have become a prominent topic of discussion among scholars, practitioners and policymakers. Preponderance of research and an increasing global pressure to adopt GnSBMs necessitate a comprehensive understanding of the state of research on GnSBMs. Towards this end, we extracted 851 publications on GnSBMs from the Scopus ...
Green Business: Opportunities and Challenges for Sustainability
Feature papers represent the most advanced research with significant potential for high impact in the field. A Feature Paper should be a substantial original Article that involves several techniques or approaches, provides an outlook for future research directions and describes possible research applications. ... green business practice ...
A bibliometric and thematic analysis of green ...
The paper with the most citations (156) is "Doing business in a green way: A systematic review of the ecological sustainability entrepreneurship literature and future research directions," written by, and published in the Journal of Cleaner Production (Gast et al., 2017).
Green horizons: Unleashing green innovation through green business
Business Strategy and the Environment is a sustainable business journal advancing green business strategy through eco-innovation, green finance, circular economics & more. Abstract China's manufacturing industry environmental regulations portray a strategic change towards sustainable development.
The effect of green supply chain management practices on corporate
The research model and hypothesis are then analyzed with the PLS-SEM. The present paper offers the following contributions: First, it adds to the GSCM literature scope by assessing GSCM practices' effect on environmental and business performance perspectives. The study builds upon the existing GSCM literature and the DCV theory by examining the ...
Green entrepreneurship and business models: Deriving green technology
The research on business models concerning green technology is young yet scattered. • The paper aims to promote a unifying understanding and research pathways. • The paper introduces a green technology business model framework. • The framework provides empirical examples for green technology business models.
The Potential of Servicizing as a Green Business Model
Abstract. It has been argued that servicizing business models, under which a firm sells the use of a product rather than the product itself, are environmentally beneficial. The main arguments are as follow. First, under servicizing the firm charges customers based on the product usage. Second, the quantity of products required to meet customer ...
Sustainable Business Performance: Examining the Role of Green HRM
Feature papers represent the most advanced research with significant potential for high impact in the field. ... It is evident to us that when firms include sustainability principles in essential business operations such as green human resource management, green innovation, and responsible leadership, there is a greater chance for sustainable ...
Research Progress of Green Marketing in Sustainable Consumption based
We can find that 533 papers come from environmental sciences, 481 from green & sustainable science & technology, 362 from environmental studies, 294 from business, and 213 from engineering environment (accounting for 33.607%, 33.036%, 24.863%, 20.192%, and 14.629% respectively); management, energy fuels, economics, operations research ...
Green innovation: A systematic literature review
Green innovation (GI), as a key factor in maintaining environmental management ( Aguilera-Caracuel and Ortiz-de-Mandojana, 2013; Arenhardt et al., 2016; Chen, 2008; Chen et al., 2012; Yang et al., 2016 )), is of vital importance for organizations and communities; investigations in this domain have mainly witnessed a rising trend over recent years.
Green marketing as an environmental practice: The impact on green
Many companies have developed a green marketing strategy, aimed at promoting and selling green environmental products. While the majority of articles on this topic report on studies in a business-to-consumer setting, this research focusses on the impact of green marketing strategies on the satisfaction and loyalty of professional buyers in a business-to-business setting.
Full article: Business sustainability for competitive advantage
In addition to this, as the current research is intended to assess the Business Sustainability for attaining the Competitive Advantage through understanding the role of Green Intellectual Capital, Environmental Management Accounting, and Energy Efficiency, the required sample for the research is the firms or organizations.
GREEN BUSINESS: CHALLENGES AND PRACTICES
Abstract. The paper deals with the relatively new worldwide trend of adding a "green" slant to business. The purpose of the research was twofold: firstly, to clarify the definition of "green business", secondly, to test the hypothesis that the differences in business penetration by "green" ideas in various countries are to a large extent determined by national specifics in terms of ...
Green Innovation Practices and Its Impacts on Environmental and
Zhang, J., Zhang, X., Wang, Q., and Ma, Z. (2019). "Relationship Between Institutional Pressures, Green Supply Chain Management Practices and Business Performance: An Empirical Research on Automobile Industry," in Paper presented at the International Conference on Management Science and Engineering Management. San Francisco: ICMSEM. Google ...
Research on the Impact of Digital Inclusive Finance on Green Innovation
Green innovation is an effective driving force for high-quality development in the new era. As a new financial service model, digital inclusive finance provides a new way to solve the financing dilemma of green innovation. In order to investigate the impact of digital financial inclusion on the green innovation of small and medium-sized enterprises (SMEs), based on the panel data of SMEs in ...
Factors affecting green purchase behavior: A systematic literature
Business Strategy and the Environment is a sustainable business journal advancing green business strategy through eco-innovation, green finance, circular economics & more. Abstract The worldwide increased consumption of goods and services squeezes natural resources, thus causing severe damage to the environment. ... These research papers were ...
Introduction
Green businesses, also called sustainable businesses, seek to balance profit with the health of the planet and its various populations. There is a vast array of services and products offered by businesses in this category. The degree to which sustainable practices are embraced and implemented varies widely among them depending on many ...
Advancing green finance: a review of sustainable development
We conducted extensive research to identify scholarly articles, publications, and research papers on green finance, sustainable development, and their future implications. Various sources, such as online databases and academic platforms, were utilized to compile relevant information on the subject. ... Business Strategy and the Environment 32 ...
Research article Impact of green finance and fintech on sustainable
The present research paper investigates whether green finance helps improve economic efficiency in production, allocation, and distribution. (1) Equated with the conventional finance system, green finance highlights the operative use of capital [20], which establishes significant standards for measuring the efficiency of its actions. In this ...
Literature review of greenwashing research: State of the art
Presenting a general research perspective on greenwashing and showing the research results from a bird's eye view is what distinguishes this article from others and builds its original value. Indeed, this article is a review of literature reviews. The paper is organized as follows: Section 2 presents literature review.