Sustainability Leadership and Employee Engagement: A Key Driver of Productivity in Indonesian Companies

The background of this research is the challenge faced by Indonesia’s economic development in achieving sustainable growth without increasing carbon emissions. This study aims to analyze the influence of leadership and the implementation of sustainability principles on productivity, with employee engagement as a mediator in public and private companies in Indonesia. The research adopts a quantitative approach, utilizing data analysis through the Structural Equation Modelling Partial Least Square (SEM PLS) method. The study sample comprises 110 respondents from public and 110 respondents from private companies, with data collected through questionnaire surveys with G*Power 88%. Research variables include sustainability leadership, implementation of sustainability principles, employee engagement, and productivity. The findings reveal that employee engagement significantly influences employee productivity and mediates the effect of sustainability leadership on employee productivity. These findings highlight the critical role of sustainability-based leadership in fostering employee engagement and enhancing productivity. The study concludes that Indonesian companies, particularly those oriented toward sustainability, need to prioritize the development of sustainability-based leadership and policies to enhance employee engagement, thereby supporting long-term productivity.