Identifying the role of aggressive low carbon innovation on a firm’s environmental, social, and governance performance

The object of this study is the ESG performance in emerging market energy companies. The problem to be solved is the identifying how internal strategic orientations translate into measurable sustainability outcomes. Despite the theoretical acknowledgment of GMO and MC as sustainability enablers, empirical evidence on their pathways to ESG outcomes remains limited. The study examines the role of Aggressive Low Carbon Innovation (ALCI) as a mechanism through which GMO and MC exert their influence on ESG performance. The findings indicate that MC has a significant indirect effect on ESG performance through ALCI (β = 0.312, p < 0.01), while its direct effect is not statistically significant (β = 0.127, p > 0.05). GMO shows a strong positive effect on ALCI (β = 0.488, p < 0.001), but its direct influence on ESG performance is also insignificant (β = 0.089, p > 0.05). In contrast, ALCI demonstrates a strong direct impact on ESG performance (β = 0.446, p < 0.001), confirming its role as a pivotal mediator. These results suggest that the implementation of ALCI serves as a necessary bridge between strategic orientation and sustainability outcomes. The effectiveness of ALCI in improving ESG performance can be explained by its capacity to integrate environmental innovations into business operations aggressively, thereby enhancing compliance, reputation, and stakeholder trust. The findings are most applicable under conditions where organizational leadership is committed, market orientation supports sustainable value, and regulatory environments encourage innovation. This research provides actionable insights for firms seeking to enhance ESG outcomes through internal capability building and strategic innovation pathways