Leading ethically, performing sustainably: ethics as the driving force of performance

Purpose This study was inspired by the increasing focus on socially responsible, sustainable, and ethical activities in contemporary enterprises. The ability of ethical leadership (EL) to advance corporate social responsibility toward society and employees is becoming more widely acknowledged. Nevertheless, little is known about the mechanics behind this. This study looks at how EL improves task performance (TP) and promotes employee well-being when it is backed by diversity culture (ODC) and green transformational leadership (GTL). It seeks to offer insightful information about creating inclusive, accountable, and productive organizations. Design/methodology/approach A two-wave-time-lagged longitudinal approach was employed, utilizing survey data from 196 freelance healthcare industry employees. SmartPLS 4.1 is used for testing the complex model and for assessing the predictive relevance of the model. Findings The findings reveal that CSRE fully mediates the relationship between ethical leadership and Corporate Social Responsibility (ß = 0.29, t = 4.57, p < 0.005), and Organizational Diversity Climate and GTL serially mediate the impact of EL on CSRS (ß = 0.028, t = 2.12, p < 0.005). Additionally, CSRS partially mediates the relationship between green transformational leadership and task performance (ß = 0.08, t = 2.46, p < 0.005). Practical Implications Organizations should focus on fostering ethical leadership, an inclusive organizational climate, and green transformational leadership to drive CSR engagement and improve employee performance outcomes. Originality/value The study demonstrates that EL alone is insufficient for promoting CSRS unless it is supported by a culture of inclusivity, sustainability, and genuine concern for employee welfare, which in turn enhances task performance.