Introduction

Environmental sustainability has become a critical focus in the global financial landscape, especially in the banking sector, due to heightened concerns about climate change, resource depletion, and increasing regulatory pressures (Al Amin et al., 2023; Shakil et al., 2019; Zheng, 2023). Banks, as pivotal institutions within financial ecosystems, are now expected to take active roles in driving sustainable development through environmentally responsible practices and investments (Dai et al., 2022; Guang-Wen & Siddik, 2022). This study is motivated by the urgent need to understand the role of leadership in shaping such sustainability initiatives, particularly in the context of China, where rapid industrialization and environmental degradation pose significant challenges. By addressing how top management commitment (TMC) influences key organizational strategies, namely green investment (GI), corporate social responsibility (CSR) practices, and environmental strategy (ES)—this research provides valuable insights into the mechanisms that enhance environmental sustainability performance (ESP) in the banking sector.

This study specifically examines the interplay of TMC, GI, CSR, and ES, aiming to fill critical research gaps in the literature. TMC refers to the active involvement and prioritization of sustainability goals by senior management, which is crucial in shaping strategic investment decisions and driving organizational change (Latan et al., 2018). GI encompasses financial allocations toward environmentally sustainable projects, while CSR practices involve the integration of environmental and social concerns into business operations (Carroll, 1979). Furthermore, ES reflects the strategic plans organizations adopt to achieve long-term environmental goals (Aftab et al., 2023). Finally, ESP measures the effectiveness of an organization in meeting its environmental goals and reducing its ecological footprint (Malsha et al., 2020; Zheng et al., 2021). Grounded in stakeholder theory, which asserts that organizations have responsibilities beyond profit maximization to a broader network of stakeholders, including the environment, this study seeks to explain the nuanced relationships among these variables (Indriastuti & Chariri, 2021). It is posited that TMC significantly influences organizational endeavors like GI and that such investments, coupled with CSR practices and ES, culminate in enhanced ESP, reinforcing the theoretical foundation of this research (Gallego-Álvarez & Ortas, 2017). The focus on China provides a unique context due to its significant economic footprint and recent surge in environmental initiatives (Li et al., 2023; Saqib & Usman, 2023). The country’s rapid industrialization and concurrent environmental degradation spotlight the need for sustainable practices within the financial sector, offering insights that may have global relevance given China’s substantial economic influence (Wang, 2023; Wu et al., 2023).

Recent studies have predominantly focused on the relationship between green finance and environmental performance (EP) (Bhuiyan et al., 2024; Dai et al., 2022; Gulzar et al., 2024; Hoang & Tuan, 2023; Khan et al., 2023), CSR and EP (Dai et al., 2022; Khaddage-Soboh et al., 2024; Liu, 2024; Owusu et al., 2024; Soomro et al., 2024), and ES and EP (Aftab et al., 2023; Ibrahim & Mahmood, 2022; Seroka-Stolka, 2023; Tan et al., 2022). Additionally, a few studies have examined the role of green finance in improving environmental sustainability performance (Guang-Wen & Siddik, 2022; Hussain et al., 2023; Siddik et al., 2023; Yan et al., 2022; Zheng et al., 2021). The literature suggests that TMC moderates the relationship between green banking adoption and environmental, operational, and financial performance (Newton et al., 2024). Another study by Kitsis and Chen (2021) found that TMC mediates the relationship between stakeholder pressures and green operations. Furthermore, TMC and corporate environmental strategy have been shown to significantly improve EP (Latan et al., 2018). However, there is a notable lack of studies examining how TMC promotes GI, CSR, and ES within banking institutions in a single study. Additionally, the mediating roles of CSR and ES in the link between GI and ESP are underexplored, particularly within the context of stakeholder theory.

This gap is critical as it leaves unanswered questions about the mechanisms through which TMC influences these factors to enhance ESP in the banking sector. Thus, this study aims to fill these gaps by examining the relationships among TMC, GI, CSR, ES, and ESP within the context of banking institutions in an emerging economy like China. By exploring these dynamics, the research will provide a comprehensive understanding of how TMC can drive environmental sustainability through GI, CSR, and ES, offering both theoretical and practical insights. The main research questions guiding this study are: (1) How does TMC influence GI, CSR practices, and ES in the banking sector? (2) What is the impact of GI on CSR practices, ES, and ESP? (3) How do CSR practices and ES mediate the relationship between GI and ESP? The primary objective is to investigate the intricate relationships among these variables to provide a comprehensive framework for understanding how TMC drives environmental sustainability in the banking sector.

This study presents significant theoretical and practical implications by interpreting the intricate interactions among TMC, GI, CSR practices, ES, and ESP in Chinese banking institutions. It extends the existing literature by emphasizing the pivotal role of leadership in fostering organizational sustainability and applying stakeholder theory to contextualize how these variables collectively enhance ESP. The findings demonstrate that TMC and GI positively influence CSR practices and ES, which subsequently improve ESP. This reveals that green investments alone are insufficient; they must be operationalized through comprehensive CSR practices and well-articulated environmental strategies to achieve substantial improvements in ESP. The study offers a comprehensive framework by integrating multiple variables, addressing a gap in existing literature, and aligning with calls for more integrative research frameworks. By providing a holistic perspective on the factors driving environmental sustainability, the study suggests that a multifaceted approach involving leadership commitment, strategic investments, and CSR initiatives is essential for ESP in the banking sector. This research enriches the theoretical discourse on environmental sustainability and offers actionable insights for practitioners and policymakers, paving the way for future research and practical implementation in sustainable business practices.

The subsequent sections of this paper detail the theoretical background and, hypothesis development, methodologies used, present the data analysis findings, discuss the implications, and conclude with the theoretical and practical contributions of the study. Additionally, limitations are acknowledged, and areas for future research are proposed to continue the academic dialog on environmental sustainability within the banking sector.

Literature review and development of research hypotheses

Theoretical background

Stakeholder theory broadly postulates that organizations have responsibilities to multiple groups and entities, not just shareholders (Freeman et al., 2010). These entities, or stakeholders, include employees, customers, suppliers, communities, governments, and the environment. This perspective suggests that businesses should make decisions that take the interests of all stakeholders into account. TMC often plays a crucial role in this context, as it reflects the degree of dedication and active involvement of an organization’s leadership in driving specific initiatives. In an emerging economy like China, where the need for sustainable development and resource utilization is pressing, this commitment towards green investment can be particularly pivotal. Applying stakeholder theory to green investment, we can view it from two perspectives: (1) the direct influence of stakeholders, where pressure or demand from stakeholders encourages banks to adopt more sustainable practices, commonly known as green finance (Acquah et al., 2023). These practices include prioritizing environmentally friendly projects when granting loans, offering green bonds, and investing in sustainable businesses (Dai et al., 2022; Indriastuti & Chariri, 2021). (2) The indirect influence occurs through the mediating variables of CSR practices and environmental strategies. Here, stakeholder pressure plays a critical role in driving banks to implement CSR practices and environmental strategies, which, in turn, facilitate green financing.

Furthermore, CSR practices involve actions that go beyond a bank’s legal obligations toward society and the environment. Stakeholder theory suggests that banks should consider the interests of all stakeholders, including the environment (Deng et al., 2013). As a result, banks are encouraged to adopt pro-environment CSR initiatives. These might include educating customers about green investments, supporting community environmental initiatives, or reducing their own carbon footprints. Environmental strategies, on the other hand, are the approaches a bank adopts to manage its relationship with the environment (Kraus et al., 2020). These strategies can be reactive (responding to environmental problems once they arise) or proactive (anticipating and preventing potential environmental issues). A proactive environmental strategy can greatly enhance a bank’s commitment to green investment. Moreover, stakeholders—both internal, such as employees and management, and external, such as customers, shareholders, regulators, and society—can exert pressure on banks to adopt CSR practices and proactive environmental strategies (Indriastuti & Chariri, 2021). These pressures may come in various forms, such as consumer demand for sustainable investments, regulatory requirements for transparency in green lending, or employee advocacy for sustainable internal operations. By responding to stakeholder interests with appropriate CSR practices and environmental strategies, banks can promote green investment, thereby enhancing their ESP. This approach not only benefits the environment but also provides significant advantages to banks, such as an improved reputation, increased customer loyalty, and potential risk mitigation.

Development of research hypothesis

Relationship between TMC and GI

Stakeholder theory suggests that businesses have responsibilities to various stakeholders, including employees, customers, the community, and the environment (Wijethilake & Lama, 2019). Consequently, strategic decisions, such as green investment, are influenced by these stakeholders. Organizations should consider the interests of all stakeholders, including environmental ones when making decisions (Indriastuti & Chariri, 2021). When top management commits to green investment, they are more likely to support environmentally beneficial projects like renewable energy or sustainable business practices. Companies are increasingly driven by internal stakeholder pressures to adopt environmentally responsible practices (Yen, 2018). This awareness is pushing companies towards sustainability and reducing their ecological footprint, reflecting a broader commitment to sustainable initiatives (Bukhari et al., 2022). Prior research highlights the significant role of top management in shaping an organization’s sustainability initiatives (Bukhari et al., 2022; Yen, 2018). For instance, Yen (2018) found that top management commitment is crucial for green collaboration, seen as a proxy for sustainability initiatives. However, in Taiwanese electronics companies, green investments were primarily driven by regulatory compliance and market demands rather than top management commitment (Shonte & Ji, 2022; Ye & Dela, 2023). In developing countries like Pakistan, customer and competitor pressures increase transparency in green banking initiatives, with top management commitment strengthening sustainable banking adoption (Bukhari et al., 2022). Thus, in Chinese banking institutions, we hypothesize that top management’s commitment to environmental sustainability is a major driving force promoting green investment. Therefore, the following hypothesis is formulated:

Hypothesis 1: TMC is positively associated with the implementation of GI.

Relationship between TMC and CSR

Commitment from top management is essential for fulfilling an organization’s objectives and enhancing its long-term performance, highlighting that senior management’s passion and involvement are crucial for achieving organizational goals (Wang et al., 2023). According to stakeholder theory, organizations should consider the interests of all their stakeholders, including employees, customers, suppliers, communities, and the environment (Freeman et al., 2010). When top management is committed to CSR, they are more likely to allocate resources to CSR initiatives, develop CSR policies and procedures, and communicate CSR goals to employees (Abbas, 2020; Shonte & Ji, 2022; Wang et al., 2023). This can lead to the implementation of CSR practices that promote environmental sustainability. Previous research supports the link between TMC and CSR practices. For example, a study of coffee-exporting enterprises in Ethiopia found that TMC was positively associated with the implementation of CSR practices to promote sustainable export performance (Shonte & Ji, 2022). The study also found that CSR partially mediated the link between TMC and sustainable export performance. Another study of SMEs in China found that top management commitment positively moderated the link between CSR practices and sustainability performance (Wang et al., 2023). Similarly, Chatterjee et al. (2023) argue that the engagement and dedication of top-level executives in CSR projects are critical to their success. Furthermore, research has shown that senior management’s strong dedication positively impacts the implementation of management systems (Wijethilake & Lama, 2019). Hence, TMC plays a critical role in promoting CSR practices. However, there is a lack of studies in the context of Chinese banks showing that TMC enhances CSR practices to improve environmental sustainability performance. Therefore, this research focuses on banking institutions in China to address this gap. The following hypothesis is developed:

Hypothesis 2: TMC is positively associated with the implementation of CSR practices.

Relationship between TMC and ES

Stakeholder theory posits that organizations are influenced by the expectations of their stakeholders, including customers, employees, shareholders, and the community. In the context of environmental sustainability, stakeholders increasingly demand that organizations adopt green practices. TMC’s environmental sustainability is a key factor in determining whether an organization will adopt green practices. When top management is committed to environmental sustainability, they are more likely to allocate resources to green initiatives, develop green policies, and foster a green culture within the organization. The literature has revealed that TMC has an indirect impact on environmental corporate strategy and environmental marketing strategies (Saleem et al., 2021). Furthermore, there is a growing body of evidence supporting the hypothesis that TMC is positively associated with the adoption of environmental green practices. For example, a study of tire manufacturing industries in Indonesia found that organizations with higher levels of TMC to environmental sustainability were more likely to adopt environmentally green practices (Hariadi et al., 2023). Similarly, Amir and Chaudhry (2019) found that TMC positively impacted environmental performance. Conversely, the banking sector in China is a major contributor to environmental degradation by funding harmful industries like petroleum and chemicals. Thus, TMC’s environmental sustainability is essential for the Chinese banking sector to reduce its environmental impact and promote sustainability through green environmental strategies. Consequently, it can be argued that TMC related to environmental sustainability is positively associated with the adoption of green environmental strategies by banking institutions. Therefore, the following hypothesis is developed:

Hypothesis 3: TMC is positively associated with the adoption of ES.

Relationship between GI and ESP

In recent times, there has been growing interest among researchers in GI, primarily because it helps companies enhance their EP. This is achieved by financing a diverse range of eco-conscious projects, from clean energy to waste management and pollution mitigation (Zheng et al., 2021). However, there has been a noticeable lack of studies exploring GI’s impact on a firm’s ESP. This research is timely, focusing on the influence of GI on the ESP of banks, particularly in emerging markets like China. For this study, GI is defined as the financing mechanism aimed at eco-friendly projects, ultimately bolstering an entity’s overall sustainability. Prior research has highlighted that the social, environmental, and economic facets of green finance play a pivotal role in shaping the ESP of banking entities (Zheng et al., 2021). Moreover, recent academic works underscore the importance of green finance in forecasting a company’s eco-centric performance (Wang et al., 2022; Xu & Li, 2020; Zhang et al., 2022). It has also been observed that green investments enhance both financial outcomes and ESP for businesses (Indriastuti & Chariri, 2021). By significantly reducing carbon footprints in both short and long durations, GI bolsters organizational sustainability (Al Mamun et al., 2022). Essentially, GI serves as a vital tool in curbing both internal and external environmental pollutants, thereby elevating an entity’s holistic ESP. Based on these insights, we propose the following hypothesis:

Hypothesis 4: GI has a significant positive impact on the ESP of banks.

Relationship between GI, CSR, and ESP

Researchers today focus on GI and CSR due to their significant influence on an organization’s environmental outcomes (Dai et al., 2022). Over the past few decades, GI and CSR have emerged as pivotal business practices globally (Guang-Wen & Siddik, 2022; Indriastuti & Chariri, 2021). GI is understood as a contemporary economic trend that amalgamates economic, social, and environmental advantages (Wang & Zhi, 2016; Zheng et al., 2021). Conversely, Carroll (1979) described CSR as the spectrum of a firm’s social obligations, encompassing societal expectations related to regulatory, economic, moral, and discretionary aspects (Carroll, 2016). Sinha et al. (2021) further postulated that certain GI processes could inadvertently exert detrimental effects on firms’ environmental and social commitments. Firms adopt GI and CSR strategies to satisfy various stakeholders, including the public, shareholders, and customers, enhance their fiscal outcomes, and address social and environmental challenges (Indriastuti & Chariri, 2021). By channeling funds into diverse environmental endeavors, GI can potentially steer a firm’s corporate sustainability, thereby bolstering its environmental performance (Chen et al., 2022; Dai et al., 2022; Zhang et al., 2022). A recent study by Guang-Wen and Siddik (2022) corroborated the positive impact of GI and CSR on the environmental performance of banking institutions. Similar outcomes indicating the positive correlation between CSR and environmental performance have been noted in research focusing on small and medium enterprises (SMEs) (Abdulaziz-al-Humaidan et al., 2022) and large corporate entities. Nonetheless, there have been instances where the influence of CSR on environmental performance was deemed inconclusive (Kraus et al., 2020). This presents a dichotomy in the relationship between CSR and environmental performance, highlighting the need for more in-depth scrutiny. Given this backdrop, this study introduces the following hypotheses:

Hypothesis 5: GI greatly influences the CSR of banks in a positive way.

Hypothesis 6: CSR greatly influences the ESP of banks in a positive way.

Relationship Between GI, ES, and ESP

Research outputs on the relationship between ES and CSR are abundant (Kraus et al., 2020; Tan et al., 2022); however, studies emphasizing how ES is related to GI and ESP, particularly from the banking sector perspective, are minimal. To close this gap, this study investigates the relationship between GI, ES, and ESP. GI can be characterized as financial strategies undertaken by firms to achieve environmental sustainability (Dai et al., 2022). These include investments in innovations that minimize carbon footprint, reduce energy use, promote reliance on clean energy, reduce waste, and encourage pro-ecological activities (Do & Nguyen, 2020). On the other hand, ES refers to a set of measures taken through purchases, productions, and business rules to minimize the environmental impact of operations (Latan et al., 2018). Recent studies have found that GI significantly enhances ESP (Yan et al., 2022; Zheng et al., 2021) and EP (Chen et al., 2022; Dai et al., 2022; Guang-Wen & Siddik, 2022; Zhang et al., 2022). Similarly, a positive relationship has been observed between ES and an organization’s EP (Kraus et al., 2020; Tan et al., 2022). In another study, green marketing as an ES significantly enhanced corporate ESP. An organization can achieve better ESP by integrating environmental and societal needs into its business operations (Ara et al., 2019). Additionally, the adoption of environmental supply chain strategies was observed to significantly improve the environmental, social, and economic performance of organizations (Ara et al., 2019). Based on the literature review, it can be concluded that GI and ES are essential for improving the environmental sustainability performance of an organization. Hence, the following research hypotheses are developed:

Hypothesis 7: GI greatly influences the ES of banks in a positive way.

Hypothesis 8: ES greatly influences the ESP of banks in a positive way.

The mediating role of CSR practices and ES

A prior conceptual understanding has suggested a potential relationship among GI, CSR, ES, and ESP. This theoretical proposition suggests that GI might be a precursor to firms adopting CSR and ES, leading to enhanced ESP. Despite this, there is a notable absence of empirical investigation into these relationships, particularly within financial institutions in China. This research aims to fill this gap and contribute to the growing literature on GI. Empirical studies have found a direct, positive, and statistically significant relationship between GI and CSR with EP (Dai et al., 2022; Guang-Wen & Siddik, 2022). However, Kraus et al. (2020) reported no tangible impact of CSR on EP within the manufacturing sector. Emerging research trends suggest that both green investments and CSR initiatives are potent catalysts for improving ESP (Indriastuti & Chariri, 2021). For instance, Abdulaziz-al-Humaidan et al. (2022) identified CSR’s mediating role between managerial sustainability orientations and ESP in Tunisian SMEs. Similarly, Abbas (2020) found that the relationship between Total Quality Management and corporate green performance is partially dependent on CSR interventions. Aftab et al. (2022) demonstrated that green human resource management significantly enhances environmental performance in manufacturing firms in developing countries, emphasizing the mediating roles of green innovation, environmental strategy, and pro-environmental behavior. Additionally, Aftab et al. (2023) found that CSR positively impacts financial performance in Pakistani manufacturing firms, with green dynamic capabilities and green innovation mediating this relationship, and perceived environmental volatility moderating the link between green innovation and financial performance. Historical scholarship has shown that strategic alignment with CSR mediates the relationship between dedicated sustainability committees and overall corporate EP (Orazalin, 2020). Kraus et al. (2020) further illustrated an indirect pathway between CSR and EP, mediated through ES. A study by Guang-Wen and Siddik (2023) added that green innovation serves as a mediator between fintech adoption and EP. This comprehensive literature review suggests that CSR and ES can act as intervening variables, influencing the relationship between GI and ESP outcomes in banking institutions. Given this theoretical foundation and empirical evidence, the study aims to formulate the following research hypotheses:

Hypothesis 9: The link between GI and ESP is mediated by CSR.

Hypothesis 10: The link between GI and ESP is mediated by the ES.

Figure 1 depicts the conceptual framework utilized in this study.

Fig. 1: Conceptual framework of the study.
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This research framework explains the hypothesized direct and indirect relationships among the study variables, including Top Management Commitment, Green Investment, CSR Practices, Environmental Strategy, and Environmental Sustainability Performance in the Chinese banking sector.

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Research methods

Sample and data collection

This investigation examines the complex relationships between TMC, GI, CSR practices, ES, and ESP within the Chinese banking sector. Data for this study were collected from staff working in Chinese banks using a structured questionnaire and convenience sampling to obtain broad insights. An online survey was administered through the WJX platform between February and April 2023, allowing sufficient time for participant engagement. To mitigate issues such as incomplete responses and low response rates, the sample size was increased by sending invitations to 700 bankers across various organizational levels. A total of 410 completed questionnaires were received, resulting in a 58.57% response rate. After excluding 37 incomplete surveys, the final analytical sample consisted of 373 respondents. Among these respondents, 75.3% identified as male and 24.7% as female. The majority, around 65%, were aged between 20 and 30 years, offering a youthful perspective on the data. Additionally, 63.65% of the participants held a master’s degree, reflecting a high level of educational attainment, which potentially enriched the survey results with well-informed insights. This diverse and robust sample enhances the relevance and applicability of the findings to the Chinese banking sector, providing a comprehensive understanding of the relationships among TMC, GI, CSR, ES, and ESP.

Survey items

This research employs a structured survey to explore the relationships between TMC, GI, ESP, ES, and CSR practices within banking institutions in China. The survey instrument comprises a series of items designed to gauge perceptions and practices related to these variables, utilizing a 5-point Likert scale ranging from 1 (Strongly Disagree) to 5 (Strongly Agree) for respondent’s convenience and accuracy of responses. For TMC, items derived from Wei et al. (2023) and Yong et al. (2022), such as “Top management consistently demonstrates a strong commitment to environmental sustainability practices,” and “Leaders within our bank actively engage in the development and implementation of green investment strategies,” were employed to gauge the steadfastness and operationalization of management’s commitment to environmental stewardship. GI was assessed via items inspired by Indriastuti & Chariri (2021) and Zheng et al. (2021), addressing facets like resource allocation, strategic prioritization, and oversight of green projects. ESP, explored through lenses provided by Aftab et al. (2022) and Kraus et al. (2020), incorporated items evaluating the bank’s active engagement, communication, compliance, and strategic integration regarding environmentally sustainable activities.

Moreover, ES was examined via items rooted in literature by Aftab et al. (2022), Hussain et al. (2022), and Mustafa et al. (2023), such as investments in eco-friendly technologies and partnerships in conservation initiatives. Lastly, CSR practices were measured through items based on works by Guang-Wen & Siddik (2022), Kraus et al. (2020), and Suganthi (2019), focusing on community engagement, environmental impact reduction, communication efficacy, and ethical business operations. Respondents were invited to express their agreement or disagreement with each item, ensuring responses encapsulated perceptions across various dimensions of each construct, thereby facilitating a robust exploration of the interplay among the variables within the banking context (Table 1).

Table 1 Survey items.
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Common method bias

Common Method Bias (CMB) represents a considerable challenge, particularly pronounced in research employing self-reported data, having the capacity to skew and potentially misrepresent the perceived relationships among variables under consideration (Podsakoff & Organ, 1986). In the context of the present study, which utilized questionnaires to garner data encompassing both exogenous and endogenous variables from a singular source, there existed an inherent risk of CMB infiltrating the data collection process. To quantify and address this, Harman’s single-factor technique was invoked, revealing that a single factor revealed 29% of the total variance. Conventionally, the alarm for a CMB problem is sounded when a single factor explains over 50% of the variance (Podsakoff & Organ, 1986), thus the findings from the current study, residing below this benchmark, suggest that CMB does not substantively compromise the presented results. Nevertheless, in recognition of the pivotal role of methodological rigor, it remains pertinent for future research endeavors to explore and validate these findings further, employing a diverse array of methods and data sources to shield and fortify against potential CMB implications, thereby ensuring the robustness and replicability of the outcomes.

Data analysis and results

The employment of Structural Equation Modeling (SEM) played a crucial role in analyzing both the measurement and structural models within the scope of this research, effectively addressing the study’s objectives and enhancing the predictability of outcomes (Gerbing & Anderson, 1988; Hair et al., 2010; Henseler et al., 2015). The primary data were thoroughly analyzed using SPSS version 26 and SmartPLS 4. SEM was chosen for its well-known ability to mitigate biases from measurement inaccuracies and establish a clear hierarchy among latent variables (Prajogo & Cooper, 2010). To rigorously examine the research framework, a two-stage SEM technique was applied, following methodologies highlighted in previous research (Gerbing & Anderson, 1988). In the initial stage, the validity and reliability of the measurement model were tested using Confirmatory Factor Analysis (CFA) to assess the convergence and discriminant validity of the constructs. In the second stage, SEM was used to explore the structural relationships among the study variables, providing a comprehensive understanding of their dependencies and associations. Additionally, descriptive statistics were utilized to test data normality, ensuring the robustness and reliability of the findings (Kline, 2015). This structured, multi-stage analytical approach not only strengthens the study’s empirical foundation but also enriches its analytical depth, allowing for a nuanced understanding of the underlying patterns within the data. The rigorous methodology ensures that the research findings are both well-supported and contribute significantly to the existing body of scholarly work.

Descriptive statistics and data normality

Table 2 presents the descriptive statistics of the study variables, revealing mean values oscillating between 3.92 and 4.107 and suggesting a prevalent agreement among participants with the questionnaire items. Standard deviations are notably consistent, ranging from 0.715 to 0.895, thereby indicating a homogeneous dispersion of responses and facilitating comparably reliable subsequent analyses across all variables. Further empirical scrutiny divulged skewness and kurtosis values below 3 and 10, respectively, affirming the data’s appropriateness for SEM by reflecting a suitable symmetrical and tail-end distribution. The results were further subjected to a normality test, with variances aligning within the accepted thresholds as established by earlier studies (Kline, 2015), thus fortifying the robustness and reliability of the data for ensuing analyses. This statistical foundation ensures that further explorations and analyses, specifically utilizing SEM, rest on credible, validated data, thereby enhancing the validity and reliability of eventual findings and conclusions drawn from the study.

Table 2 Descriptive statistics and data normality.
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Measurement model: validity and reliability

The CFA method has been instrumental in evaluating the measurement model by examining the dynamic relationship between latent variables and their indicators. Prior studies (Hinkin, 1998) have highlighted that CFA not only scrutinizes but also validates the unidimensionality and overall validity of the measurement model. This model includes four pivotal tests: individual item reliability, internal reliability, convergent validity, and discriminant validity. A detailed review of the measurement model findings, as shown in Table 3, reveals that the individual factor loadings range from 0.711 to 0.859. This range exceeds the benchmark threshold value of 0.50 (Hair et al., 2010), affirming the reliability of the individual items. To evaluate the internal reliability of the variables, two statistical tools were utilized: Composite Reliability (CR) and Cronbach’s Alpha (CA). The results indicated that the CA and CR values for all the variables exceeded the conventional standard value of 0.6, a figure validated as acceptable in the academic domain (Hair et al., 2010). These findings confirm the robustness of the measurement model, ensuring that the variables are reliably measured and valid for further analysis.

Table 3 Outcomes of the measurement model.
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Focusing on convergent validity, guidelines by Hair et al. (2010) suggest that an AVE value equal to or exceeding 0.50 for each construct is satisfactory. Alternatively, Fraering and Minor (2006) propose that an AVE value of 0.40 can also meet the requirements for convergent validity. However, Malhotra and Dash (2011) argue that the latter criterion is somewhat stringent and recommend relying primarily on CR to establish convergent validity. In the context of the present study, the CR values ranged from 0.71 to 0.826, while the AVE values spanned from 0.521 to 0.655. These values comfortably meet the convergent validity criteria set forth by Fraering and Minor (2006), Hair et al. (2010), and Malhotra and Dash (2011). Thus, the constructs in this study demonstrate adequate convergent validity, ensuring that the latent variables are well-represented by their indicators.

The discriminant validity of the study variables was assessed using the Fornell-Larcker method and the HTMT approach. According to Fornell-Larcker, the AVE for each factor exceeded the square root of its correlation with any other construct. Additionally, HTMT values (refer to Table 4) for each variable were below the 0.90 threshold, confirming the absence of discriminant validity issues (Henseler et al., 2015). This thorough validation process ensures the reliability and validity of the constructs, reinforcing the credibility and generalizability of the study’s findings.

Table 4 Discriminant validity.
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Structural modeling and hypothesis testing

In the subsequent analysis, the measurement model was carefully executed, followed by a thorough investigation of the SEM using SmartPLS 4 to validate the initially proposed research framework. Key fit indices, such as a p-value of 0.00 and an SRMR of 0.068, were evaluated, both of which are considered adequate and satisfactory according to various prior studies (Bagozzi & Yi, 1988; Browne & Cudeck, 1992; Hu & Bentler, 1999; Salisbury et al., 2002). Additionally, the p-values and t-values within the SEM were calculated to assess the study’s hypotheses, with the results visually presented in Fig. 2.

Fig. 2: Estimated structural model of the study.
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This research framework highlights the estimated direct and indirect relationships among the study variables, including Top Management Commitment, Green Investment, CSR Practices, Environmental Strategy, and Environmental Sustainability Performance in the Chinese banking sector. Significant at ***p < 0.001 and **p < 0.01.

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Table 5 shows the predictive relevance of the model variables, indicated by R-square, adjusted R-square, and Q2 values. CSR has an R-square of 0.296, an adjusted R-square of 0.292, and a Q2 value of 0.182, signifying moderate predictive relevance. Environmental Strategy has a lower predictive relevance with an R-square of 0.158, adjusted R-square of 0.153, and Q2 of 0.096. ESP shows higher predictive relevance with an R-square of 0.322, adjusted R-square of 0.316, and Q2 of 0.203. GI has an R-square of 0.172, an adjusted R-square of 0.170, and Q2 of 0.086. While these R-square values, particularly for Environmental Strategy and GI, may seem low, they are consistent with expectations in social science research, where multiple factors often interact in complex ways. In such contexts, R-square values typically capture only a portion of the variance explained by the model. In this study, the R-square values provide meaningful insights into the model’s predictive power, particularly in highlighting the significant influence of TMC and GI on key outcomes such as CSR and ESP. Furthermore, these values are aligned with prior sustainability research, where lower R-square values are common due to the multifaceted nature of the constructs (Siddik et al., 2023; Saunila et al., 2019). Therefore, despite the seemingly low values, the findings remain robust and theoretically significant. In addition to R-square values, the effect size (f2) presented in Table 6 provides further support for the model’s robustness. TMC significantly impacts GI (0.208) and CSR (0.096), while Green Innovation strongly affects ESP (0.163) and CSR (0.152). Although CSR and ES have smaller effects on ESP (0.032 and 0.028, respectively), these relationships still contribute meaningfully to the model. The effect size analysis helps to confirm the practical relevance of these relationships, even when R-square values are lower, suggesting that TMC and GI are critical drivers of CSR and ESP outcomes. Therefore, the model demonstrates moderate predictive relevance, with varying effect sizes across the variables, underscoring the importance of leadership commitment and strategic investments in fostering environmental sustainability within the banking sector.

Table 5 Predictive relevance.
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Table 6 Model effect size (f2).
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The research adopted a fundamental statistical principle, wherein if the t-value exceeded 1.96 or, alternatively, the p-value was less than 0.05, the posited hypotheses were accepted, otherwise rejected. It is crucial to underscore that accepting or rejecting hypotheses carries substantial implications for the research’s contextual understanding; accepting a hypothesis, signaled by a t-value larger than 1.96 or a p-value below 0.05, indicates a statistically significant observation supportive of the research claims, while failure to meet these thresholds may necessitate a reevaluation of the foundational theoretical model or probing into alternative hypotheses to ensure the findings and subsequent conclusions are deeply rooted in rigorous statistical and empirical scrutiny.

Table 7 efficiently outlines a series of hypotheses tests, illustrating the relationships between various paths through β-values, standard errors (SE), t-values, p-values, and remarks on the support status of each hypothesis in a SEM framework. Hypotheses H1 through H8 assess direct paths between variables: TMC to GI (H1; β = 0.415***), TMC to CSR (H2; β = 0.286***), TMC to ES (H3; β = 0.208***), GI to ESP (H4; β = 0.399***), GI to CSR (H5; β = 0.359***), CSR to ESP (H6;β = 0.168***), GI to ES (H7; β = 0.263***), and ES to ESP (H8; β = 0.146**). All these hypotheses are supported, as indicated by their respective t-values (all exceeding the critical value of 1.96) and p-values (all below the threshold of 0.05), affirming significant relationships between the respective variables. Further, mediation analysis, evaluating indirect effects, demonstrated that GI to CSR to ESP (H9; β = 0.06***) and GI to ES to ESP (H10; β = 0.038**) pathways are fully mediated, denoting that the relationship between independent and dependent variables (GI and ESP) is accurately expressed through the mediators (CSR and ES, respectively). Both mediation hypotheses are supported, as indicated by t-values surpassing 1.96 and p-values less than 0.05, confirming the pivotal role of CSR and ES in connecting GI and ESP within the conceptual framework. This thorough analysis of the paths, direct and mediated, substantially contributes to the understanding and validation of the structural model under scrutiny.

Table 7 Outcomes of research hypotheses.
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Discussion and conclusion

The investigation of the relationships among TMC, GI, CSR practices, ES, and their collective impact on ESP has unveiled several critical findings through the lens of stakeholder theory. First, TMC is a significant catalyst in promoting GI, CSR practices, and ES within Chinese banking institutions. Stakeholder theory underscores the importance of organizational leaders in integrating environmental considerations into their strategies, showing that active leadership support for environmental stewardship leads to comprehensive environmental initiatives that benefit both internal and external stakeholders (Indriastuti & Chariri, 2021). Empirical findings reveal that GI significantly enhances the ESP of banks by financing sustainable projects such as renewable energy and clean technologies. This parallels previous studies, indicating that GI bolsters organizational sustainability performance (Indriastuti & Chariri, 2021; Zheng et al., 2021). Green investments not only provide financial returns but also address environmental impacts, aligning with stakeholder interests and elevating the sustainability performance of banks. Furthermore, GI positively influences CSR practices, suggesting that environmentally conscious banks refine their CSR policies to achieve organizational sustainability (Indriastuti & Chariri, 2021; Wang et al., 2022). Green investments enhance a company’s reputation among stakeholders, fostering better relationships and new opportunities.

The study also finds that CSR practices significantly augment banks’ ESP, consistent with other research affirming the role of CSR in sustainability (Indriastuti & Chariri, 2021). Banks can improve their sustainability by adhering to CSR activities, such as ethical, legal, economic, and discretionary initiatives. Additionally, GI positively impacts ES, reinforcing the relationship between green investments and environmental sustainability (Zakari & Khan, 2022). Stakeholder theory explains that green investments consider environmental consequences, aligning with the interests of various stakeholders, including consumers and regulators (Acquah et al., 2023). ES, in turn, significantly influences ESP, as supported by other studies (Aftab et al., 2022; Kraus et al., 2020; Rötzel et al., 2019).

The full mediation of CSR practices and ES in the relationship between GI and ESP suggests that green investments yield substantial environmental performance improvements when operationalized through robust CSR practices and coherent environmental strategies (Indriastuti & Chariri, 2021). While GI is a fundamental pillar, it is the subsequent practices and strategies that actualize the desired outcomes in ESP. Therefore, this study explains the interlinkages among TMC, GI, CSR practices, and ES in influencing ESP, intricately weaving these insights into the theoretical framework of stakeholder theory. The findings provide avenues for further research and practical implications for environmental sustainability within the banking sector in China, contributing to the existing body of knowledge and paving the way for sustainable organizational practices grounded in theoretical and empirical validations.

Study’s contributions, limitations, and directions for further study

Theoretical contributions

This study presents significant theoretical and practical implications by elucidating the intricate interactions among TMC, GI, CSR practices, ES, and ESP in Chinese banking institutions. It extends the existing literature by emphasizing the pivotal role of leadership in fostering organizational sustainability and applying stakeholder theory to contextualize how these variables collectively enhance ESP (Siddik et al., 2023; Dai et al., 2022; Zheng et al., 2021; Wei et al., 2023; Yong et al., 2022). The findings demonstrate that TMC and GI positively influence CSR practices and ES, which subsequently improve ESP. This reveals that green investments alone are insufficient; they must be operationalized through comprehensive CSR practices and well-articulated environmental strategies to achieve substantial improvements in ESP. This mediating role underscores the complexity of achieving environmental sustainability and the necessity for integrated approaches that combine financial commitments with strategic and operational initiatives. Furthermore, the study offers a comprehensive framework by integrating multiple variables, thereby providing a holistic perspective on the factors driving environmental sustainability. This approach addresses a gap in the existing literature and aligns with calls for more integrative research frameworks that consider the interplay of various organizational factors. The findings suggest that a multifaceted approach involving leadership commitment, strategic investments, and CSR initiatives is essential for ESP in the banking sector. Finally, this study enriches the theoretical discourse on environmental sustainability in the banking sector and provides actionable insights for practitioners and policymakers. By integrating stakeholder theory and identifying key mediating roles, it offers a robust framework for understanding and improving ESP, paving the way for future research and practical implementation in sustainable business practices.

Practical implications

This study not only advances theoretical understanding in the academic realm but also offers practical implications that can be leveraged by organizational leaders, policymakers, and practitioners to enhance sustainability practices and outcomes in the banking sector. First, the study provides concrete evidence to top management in banking institutions, particularly in China, underscoring the crucial role their commitment plays in driving improved ESP through strategic GI and strong CSR practices. Second, by demonstrating how GI influences ESP, CSR practices, and ES, this research offers practical guidance for organizations on how to strategically plan their investments to achieve optimal sustainability outcomes. Additionally, organizations, especially in the banking sector, can use the findings about the impact and mediating role of CSR and ES to refine their CSR policies and environmental strategies, further enhancing their ESP. Third, policymakers could apply the insights from this study to develop or update policies related to CSR and environmental sustainability for banking institutions, ensuring that these institutions not only comply with regulations but also adopt best practices in sustainability. Furthermore, by understanding the pathways connecting investments, strategies, and practices to sustainability performance, organizations can create more effective benchmarking and performance measurement systems that ensure sustainability initiatives are well-implemented and deliver the desired outcomes. Finally, this research provides a framework for aligning organizational strategies with stakeholder expectations, improving stakeholder relationships, and fostering a positive organizational image—especially important in customer-centric sectors like banking.

Limitations and avenues for future studies

This research, while offering valuable insights into the dynamics of organizational variables influencing environmental sustainability performance in the banking sector, acknowledges its limitations and proposes several avenues for future studies. The first limitation relates to the potential subjectivity of the data, which is primarily based on bankers’ perceptions of their firm’s performance. Although these perceptions were validated through the measurement model, future research could enhance objectivity by comparing these subjective views with actual organizational data, such as annual financial statements, to provide a more comprehensive and bias-mitigated analysis of the relationships among TMC, GI, CSR practices, and ES. Additionally, this study exclusively gathered insights from bankers; incorporating perspectives from bank owners and managing directors in future research could reveal new dimensions in understanding organizational approaches to sustainability, given their strategic positions and potentially different viewpoints. Lastly, while the study focuses on private commercial banks in China, expanding the geographical and organizational scope in future investigations to include banks from other Chinese cities and emerging economies like Bangladesh, India, Vietnam, Pakistan, and Malaysia could not only improve the generalizability of the findings but also contribute to a more globally relevant theoretical framework that captures diverse economic and organizational contexts.