Environmental, Social and Governance Practices and Organizational Sustainability: The Moderating Roles of Regulatory Quality and Stakeholder Pressure in Pakistan’s Textile and Apparel Industry

Abstract

This study examines the impact of Environmental, Social, and Governance (ESG) practices on organizational sustainability in the textile and apparel sector of Pakistan. Drawing on institutional and stakeholder theories, the study further investigates the moderating roles of regulatory quality and stakeholder pressure. Using a census-based survey of firms registered with the All-Pakistan Textile Mills Association (APTMA), data were collected from 197 managerial respondents and analyzed using partial least squares structural equation modeling (PLS-SEM) with SmartPLS. The results reveal that ESG practices have a significant positive effect on organizational sustainability, confirming the strategic role of integrated ESG implementation in enhancing economic, environmental, and social outcomes. While regulatory quality does not significantly moderate the relationship of ESG and organizational sustainability, while stakeholder pressure strengthens this relationship, highlighting the importance of external stakeholder influence in sustainability-sensitive industries. This study contributes to ESG literature by adopting a multidimensional, second-order construct approach and by providing context-specific evidence from Pakistan’s textile and apparel sector. The findings offer practical insights for managers and policymakers seeking to promote sustainable industrial development in emerging economies and align firm-level practices with global sustainability goals.