Impact of Green Corporate Governance and Green Finance on Sustainable Performance: A case of Manufacturing SMEs of Pakistan

Abstract

The present research looks into the effect of green corporate governance (GCG) and green finance (GF) on the sustainable performance of manufacturing small and medium enterprises (SMEs) in Pakistan. Given the increasing level of sustainability, understanding the correlation between corporate governance, financial strategies, and the performance of sustainable businesses becomes important. The study applies quantitative methods with PLS-SEM SmartPLS. The research population consists of manufacturing SMEs operating in Pakistan. SMEs in the manufacturing sector are a mixture of different industries such as textiles, electronics, food processing, automotive, etc. SMEs, defined as those with fewer than 250 employees, significantly contribute to industrial production, job creation, and the economy of Pakistan. Findings indicate that both GCG and GF have strong positive links with sustainable performance. Green finance (β = 0.428, p <0.001) and green corporate governance (β = 0.289, p < 0.001) are the main driving forces of sustainable performance. These results bring to light the fact that integrating the consideration of environmental issues into governance and financial decision-making will lead to greater sustainability in SMEs. The study has generated useful data for policymakers, industry suppliers, and academia in terms of applicable techniques for making the manufacturing SMEs sector in Pakistan and elsewhere sustainable.