Transforming sustainable investment and stakeholder engagement into ESG performance: the mediating roles of green culture and green management innovation

This study examines how sustainable investments and stakeholder engagement influence environmental, social, and governance (ESG) performance, with green culture and green management innovation as mediating variables, among non-financial companies listed on the Indonesian Stock Exchange for 2015–2024, using structural equation model (SEM) path analysis with 5,000 bootstrap replications validated by IV-2SLS and dynamic panel GMM. Sustainable investments directly enhance ESG performance, with green culture and green management innovation as partial mediators, whereas stakeholder engagement operates entirely through full mediation via both organizational capabilities, a pattern shaped by Indonesia’s voluntary ESG disclosure regime, in which internal capabilities prove more decisive than external enforcement. ESG determinants are dimension-specific: sustainable investments dominate social performance, green culture and management innovation drive environmental performance, and stakeholder engagement strengthens governance. Companies should embed sustainable investments as a catalyst for green organizational transformation, institutionalize stakeholder engagement through internal management systems, and adopt dimension-specific rather than uniform ESG strategies.