The role of ESG reporting, artificial intelligence, stakeholders and innovation performance in fostering sustainability culture and climate resilience

Abstract

Purpose

This study aims to investigate the causal relationships among environmental, social and governance reporting (ESGR), stakeholder sustainability awareness, use of artificial intelligence (AI), sustainability culture, innovation performance and climate resilience of organizations across diverse sectors in Sri Lanka.

Design/methodology/approach

A survey was conducted among 327 respondents, including senior accounting professionals, operations managers and functional heads to gather company-level data in various industries in Sri Lanka. A disjoint two-stage approach validated the measurement model, and the partial least squares structural equation model (SEM) was used to test the proposed hypotheses.

Findings

The analysis evidences the mediating role of stakeholders' sustainability awareness on the relationship between ESGR and sustainability culture. Furthermore, it emphasizes the role of sustainability culture in driving climate resilience. Innovation performance acts as a moderator, strengthening the relationship between the use of AI and sustainability culture.

Practical implications

The study suggests that organizations should strategically use ESGR, integrate AI and prioritize stakeholder engagement to strengthen their commitment to sustainability. These provide insight for decision-making in organizations seeking to align with sustainable business practices.

Originality/value

It explores the use of AI to enhance ESGR and sustainability culture, providing a broader understanding of how organizations manage AI and stakeholders in sustainability issues.

Citation

Mohamed Riyath, M.I. and Inun Jariya, A.M. (2024), "The role of ESG reporting, artificial intelligence, stakeholders and innovation performance in fostering sustainability culture and climate resilience", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-10-2023-0621