Towards sustainable environment: Unleashing the mechanism between green finance and corporate social responsibility

Abstract

Environmental and socio-economic activities are vital to achieving sustainable growth. Corporate social responsibility (CSR) originated to achieve social equilibrium via the sustainable performance of organizations. Nevertheless, corporations require ample resources to cope with the concepts of CSR and sustainability. Accordingly, the present research analyses the function of green financing, which encompasses the economic, social, and environmental practices for accomplishing and developing CSR goals in the automobile industry. Using questionnaire survey and structural equation modelling, this study's data supports the contribution of green finance and its associated practices (economic (β = 0.248***, 0.239**, 0.312***, 0.125**, 0.549***), social (β = 0.343***, 0.147**, 0.458***, 0.593***, 0.257***), and environmental practices (β = 0.487***, 0.164**, 0.238**, 0.043*, 0.126**)) to the enhancement of CSR's implications. Research findings suggest that organizations should devote more monetary resources to enhancing CSR traits. Future research directions are also discussed at the end of study.

Keywords

Corporate social responsibility green financing practices (economic environmental social)automobile sector sustainability structural equation modelling

Introduction

Corporate Social Responsibility (CSR) has become a phenomenon that buyers closely observe and contemplate acquiring goods or services.¹ Additionally, service sectors are considered the most famous interaction tactics worldwide.^2,3 Due to the intense global market rivalry, keeping current consumers and gaining new prospective customers has become imperative.⁴ In the financial sector's perspective, there is uniformity and unanimity regarding a product provided due to the sector's tight adherence to the norms of the government's financial sectors or state automobile sectors cannot deal with the products according to their strategies. Accordingly, automobile sectors employed CSR as a relationship-building and differentiation strategy for client retention and improved market value.⁵

Although CSR is emerging as a marketing solution that allows auto manufacturers to advertise and sell their products, it facilitates the development of long-lasting connections.⁵ Due to the combination of numerous factors under CSR ideologies, researchers and scholars continue to find it difficult to conceptualize CSR within a particular setting.⁶ A distributed construct integrates the numerous pertinent societal shareholders, which includes customers, distributors, and all of the aspects mentioned underneath the framework of sustainable development of business, in which consumers, distributors, and ecosystem is included.⁷

Furthermore, to thrive in CSR, significant resources are required, at the very least, for the budgeting and forecasting requirements of the investment.⁸ Particularly in situations of environmental uncertainty, when companies produce at the expense of the ecology, the welfare management obligations must be done with the goal of environmental preservation, so not only to an encumbrance on the environment but also to address existing problems.^9,10 As a result, in these circumstances, there is financing or investment needs that adhere to ecological principles.^11,12

Green financing, often known as “Green Investments” in academia, research, and literature, has been evolving.^13–15 Nonetheless, green financing aims to organize monetary resources and activities so that sustainability can be attained with the lowest potential negative impact on the environment and surroundings.¹¹ Furthermore, it is recognized as a phenomenon wherein the financial principles are integrated while pursuing the fostering and environmental conservation and economic components through facilitating programs and events that are utilized to improve sustainability effectiveness.^7,16,17 These projects or event instigation can include and is therefore not restricted to the tasks of renewable energy,^18–20 disposal of waste materials,²¹ environmental protection,^22,23 and climate change mitigation.²⁴

The automobile sector, on the other side, as the originator of monetary backing, is required to adhere to sustainability principles. Their product portfolio should include a component that directs their financial capacity to greener investments and provides customers with affordable and reasonable financing for initiatives that aim to improve society's sustainability while incorporating economic considerations.^25,26 Though some scholars have investigated the influence of green financing practices (social practices, environmental practices, and economic practices) on achieving the CSR goals of different industries, the impact of green financing practices in reaching, exceeding, and upgrading CSR goals in the automobile industry has never been examined in any context so far. Taking this reality into account, there is a dire need to conduct a comprehensive research in the automobile sector. This study investigates the nexus between green finance and CSR goals by considering the following research questions. (i) What are the consequences of green financing practices on different CSR goals (employees, customers, society, stakeholders, and regulatory issues) in China? (ii) Do green financing practices prove to be evil or blessing for automobile industry? The current study provides several contributions in this regard. Firstly, to the best of our knowledge, this study is the first of its kind to scrutinize the linkage between green finance and CSR goals in the Chinese context. Secondly, we contribute to the existing pool of literature by investigating this linkage across major Chinese provinces, such as Shandong, Henan, Sichuan, and Zhejiang. The lessons learned from this study will help governments and decision-makers in understanding the mechanism between green financing and CSR goals to formulate better policies in the future.

The remainder of the study is categorized as follows: Review of literature provides a review of literature and hypotheses development. Method includes the research design and methodology. Results provides data analysis and results. Discussion deliberates the conclusion and future directions.

Review of literature

Green financing's economic practices and the goals of CSR

Green financing's economic practices are concerned with the ideas and procedures of generating more revenues, scale economies, productivity, and the financial consequences of sustainability and well-being of environmental philosophies.^27–29 The industry's operations concentrate on financial and economic activities, especially auto manufacturers; this element is vital and critical.^25,30 When financial sectors give support green financing that ensures environmental protection and safeguarding, such as financing for renewable energy, solar energy, waste disposal, as well as other approaches that contribute to the development of green and clean technological advancement,^31,32 this product portfolio strives to enhance the financial institution's goodwill while attempting to make it viable, which also leads to impending their economic performance.^33,34

CSR is evolved into a must-follow practice for businesses, as it aids them in attaining success in operating efficiency, gaining a competitive edge, and boosting the company's worth in the eyes of customers.³⁵ Regardless of the reality that CSR can help firms enhance their operational and financial performance,³⁵ it has a paradoxical effect, with companies contributing more to CSR as their financial conditions improve. An external evaluation of a company's recognition and adoption of CSR, on the other hand, encourages it to invest more and more,^36–38 on the other perspective, claim that five sub-categories of CSR are linked or tied to businesses as shareholders. Employees, consumers, society, stakeholders, and regulatory issues are only a few examples.

Raihan³⁹ stated that financial experts have the slightest awareness and expertise of green financing. Nevertheless, whenever the automobile sectors are economically solid, they invest in initiatives such as boosting the workers’ wages, delivering maximum customer happiness, engaging in the cultural and social activities of the community, and donating to and aiding the less fortunate.⁸ Based on these arguments, we proposed the following hypotheses:

H1: The economic practices of green financing are closely tied to CSR concerning the employees.

H2: The economic practices of green financing related to CSR concerning the consumers significantly.

H3: The economic practices of green financing are significantly connected to CSR concerning society.

H4: The economic practices of green financing are strongly tied to CSR towards stakeholders.

H5: The economic practices of green financing are closely tied to CSR concerning regulatory issues.

Green financing's environmental practices and the goals of CSR

Environmental practices are a crucial component of green financing in content, substance, and philosophical parallels to a sustainable environment.²⁵ Environmental threats, i.e., global warming, anomalous and volatile climatic and environmental situations,^40,41 disposal of waste materials,⁴² eradication of greenhouse gas emissions,^43,44 mainly remnants and emissions of carbon dioxide,^45–47 and efficient use of natural resources ^42,48–50 are urged and orchestrated. A company that embraces green business practices is more likely to do better in finances, production, and, most crucially, business sustainability.^40,51,52 Because the core of protection of the environment is linked with CSR, it is anticipated that the firm's green financing would invest in CSR.²⁵ Consequently, we proposed the following hypotheses:

H6: The environmental practices of green financing are closely tied to CSR concerning the employees.

H7: Green financing's environmental practices are closely connected to CSR concerning the consumers.

H8: Green financing's environmental practices are significantly linked to CSR concerning society.

H9: The environmental practices of green financing are closely connected to CSR towards stakeholders.

H10: The environmental practices of green financing are substantially tied to CSR in regulatory issues.

Green financing's social practices and the goals of CSR

Green financing's social practices include contributing to employee welfare, rights of stakeholders and responsibilities, consumer pleasure, and the well-being of society.⁵³ Through this factor, a company may increase its market legitimacy, brand recognition, potential value, and relationships, ultimately resulting in financial and operational success.⁸ However, tying it to CSR, due to the same core and ideals, it is thought of as quite closely connected.⁴ These characteristics include, for example, that workers are paid fairly and without discrimination, that consumers are delightedly fulfilled, that stakeholders are cared for, that society is benefited, and that regulatory requirements are met.⁵⁴ Consequently, businesses, particularly the automobile sector, are predicted as they would increase their green financing level to address the social elements, which will aid them in reaching their CSR objectives.⁸ Hence, it is hypothesized that:

H11: Green financing's social practices are closely connected to CSR concerning the employees.

H12: The social practices of green financing are closely connected to CSR towards consumers.

H13: The social practices of green financing are closely connected to CSR towards society.

H14: The social practices of green finance are significantly connected to CSR concerning the stakeholders.

H15: The social practices of green financing are strongly tied to CSR concerning regulatory issues.

Based on the assumptions described in the preceding sections, Figure 1 depicts the suggested research framework.

Method

Sample size and respondents’ selection

We used survey data to evaluate our proposed research model. The automobile industries were selected for this investigation. During the execution of the questionnaire survey, we ensured that our sample was representative of all automobile sectors functioning in China and had been operational for several years. Due to coronavirus (COVID-19) in China, it was not easy to reach so many automobile sector consumers, so we gathered our data through online questionnaire survey. The following three criteria were considered while conducting the questionnaire survey. (i) We approached respondents through online questionnaires (i.e., via email, WeChat, QQ and LinkedIn) due to the COVID-19 situation in the four provinces of China (Shandong, Henan, Sichuan, and Zhejiang). (ii) We conducted the survey during January and February, 2022 when the novel coronavirus was at its peak in the country and it was very difficult to approach so many respondents due to government-imposed restrictions such as lock down, travel constraints, and social distancing policies. Anyhow, we managed to deliver survey questionnaires to 460 respondents in such difficult times. In response to the survey questionnaire, 350 questionnaires were completed out of a total 460 sample size. Nevertheless, we abandoned 31 questionnaires because their responses were insufficient or unsuitable. There were 319 valid answers from automobile sector consumers in the study's final sample. (iii) We followed the Comrey and Lee's scale to determine the adequacy of sample size. For instance, Comrey and Lee⁵⁵ recommended the following scale, (very poor – 50), (poor – 100), (fair – 300), (very good – 500), (excellent – 1000 or more). According to this scale, even the size of our study sample (319 respondents) falls under the “very good” category, ensuring that the sample size is a representative for this research and support its findings. The demographic characteristics of respondents (gender, education, age) also indicate that the questionnaires were administered to respondents from diverse backgrounds (see Table 1). Consequently, the findings derived from this sample accurately reflect the sample's heterogeneous perspectives based on the demographic characteristics. In addition, the survey was done throughout four provinces (Beijing, Henan, Sichuan, and Zhejiang) of China, with participants from a community with diversified cultural and behavioral traits. In this perspective, the resulting sample is rich enough to produce a satisfying depiction with heterogeneous characteristics.

Table 1.

Characteristics of respondents.

Category	Options	Percentage
Gender	Male	58.6
Gender	Female	41.4
Organization's size	Less than 100	10.0
	101–199	26.3
	200–499	34.2
	More than 500	29.5
Experience	Less than 2 years	13.5
	2–5 years	30.7
	6–10 years	35.7
	More than 10 years	20.1

Variables and instruments

In examining the study aims and suggested hypotheses described in the preceding section, the survey research method was used to conduct quantitative research. In this study, data is gathered from prospective respondents via the production of a self-administered questionnaire and requires thorough preparation since it is the instrument used to collect data for the implementation of relevant descriptive statistics. In planning and implementing the approach for this research,⁵⁶ recommendations have been adhered to.

In addition, since the questionnaire formulation is vital in maximizing the likelihood of validity and internal consistency of the data, tailored measures were employed to compare respondents’ replies to the subject under study. In addition, the survey was separated into two parts. Firstly, the measurements of the phenomenon of interest were listed, while secondly, questions requesting demographic information from respondents were included. For questionnaire part 1, a 5-point Likert scale was adopted for each variable item, where “1 indicates Strongly Disagree, 2 indicates Disagree, 3 represents Neither Disagree nor Agree, 4 indicates Agree, and 5 represents Strongly Agree.”

Before distributing the questionnaire to respondents for data collection, its “Face and Content Validity” was evaluated by specialists. Five specialists were consulted for this reason. The questionnaire was verified based on its relevance to the phenomena under study and the clarity of its wording so that participants would not have any problem completing it. The professionals recommended replacing specific language that may be difficult for respondents to grasp. Therefore, these terms were substituted with comparably more accessible alternatives. Afterwards, pilot testing with a small sample size was done to determine if the questionnaire collected and reflected valid data. The findings of the pilot testing were determined to be robust and accurate, which directs the continuation of the questionnaire survey for further gathering the data.

Results

Statistical analysis

To test the proposed assumptions, we used structural equation modeling (SEM). Using SPSS (version 26) and AMOS (version 26) software, a statistical analysis was conducted. The statistical overview of the data is provided in Table 2. Correlation analysis was used to determine the link between variables. The convergence validity was evaluated by employing average variance extracted. The outcomes reveal that the AVE values are higher than 0.50, indicating that latent factors explained at least 50% of the variation. The discriminant validity determined by calculating AVE's square root. The findings indicate discriminant validity since AVE's square root is larger than its association with other constructs.⁵⁷ The values of maximum shared variance are less than the average variance estimates (AVE) for all variables, further establishing the discriminant validity (see Table 3).

Table 2.

Descriptive statistics.

Variables	Items	Observations	Coefficient of variation (CV)	Mean	Std. Dev
ECP	7	319	0.139	3.397	0.471
ENP	7	319	0.561	2.471	1.387
SCP	7	319	0.083	3.981	0.331
EMP	5	319	0.099	3.576	0.354
CNS	5	319	0.194	2.269	0.441
SOC	4	319	0.601	2.562	1.541
STK	4	319	0.034	3.342	0.112
RGI	4	319	0.208	3.563	0.741

Table 3.

Correlation, convergent, and discriminant validity findings.

Variable	ECP	ENP	SCP	EMP	CNS	SOC	STK	RGI	AVE	MSV
ECP	0.713								0.509	0.123
ENP	0.316	0.830							0.689	0.301
SCP	0.272	0.471	0.827						0.683	0.267
EMP	0.334	0.360	0.517	0.763					0.582	0.267
CNS	0.167	0.528	0.373	0.270	0.797				0.635	0.500
SOC	0.350	0.235	0.159	0.323	0.221	0.840			0.706	0.248
STK	0.178	0.105	0.096	0.156	0.054	0.498	0.754		0.569	0.248
RGI	0.297	0.549	0.505	0.406	0.707	0.231	0.090	0.743	0.552	0.500

Bold values indicate square root of AVEs.

Reliability analysis

Cronbach's alpha values were used to assess the reliability of items. The values were more than the minimum acceptable value of 0.70, so proving the data's accuracy.⁵⁸ Using composite reliability, the consistency of variables’ items was established (CR). The results suggest that the CR values are more than the permitted minimum of 0.70.⁵⁹ Table 4 depicts these results.

Table 4.

Factor loadings of measurements model.

Variables	Items	Standard loadings	Cronbach- α	CR
Economic practices			0.847	0.805
	ECP 1	0.809
	ECP 2	0.883
	ECP 3	0.905
	ECP 4	0.921
	ECP 5	0.835
	ECP 6	0.748
	ECP 7	0.680
Environmental practices			0.928	0.939
	ENP 1	0.744
	ENP 2	0.853
	ENP 3	0.829
	ENP 4	0.857
	ENP 5	0.818
	ENP 6	0.828
	ENP 7	0.852
Social practices			0.924	0.938
	SCP 1	0.607
	SCP 2	0.829
	SCP 3	0.751
	SCP 4	0.744
	SCP 5	0.838
	SCP 6	0.865
	SCP 7	0.670
Employees			0.915	0.906
	EMP 1	0.831
	EMP 2	0.881
	EMP 3	0.765
	EMP 4	0.799
	EMP 5	0.695
Consumers			0.867	0.896
	CNS 1	0.797
	CNS 2	0.821
	CNS 3	0.873
	CNS 4	0.858
	CNS 5	0.850
Society			0.834	0.923
	SOC 1	0.629
	SOC 2	0.574
	SOC 3	0.804
	SOC 4	0.951
Stakeholders
	STK 1	0.718	0.775	0.835
	STK 2	0.753
	STK 3	0.684
	STK 4	0.696
Regulatory issues			0.828	0.831
	RGI 1	0.753
	RGI 2	0.728
	RGI 3	0.748
	RGI 4	0.743

Multicollinearity

A regression test is executed to check the multicollinearity issues to find Tolerance and Variance inflation factor (VIF) values. The VIF value should not exceed 0.1.⁶⁰ According to the results, this model does not have any multicollinearity issues because values of VIF and Tolerance are within the suggested range of each variable and are in line.⁶¹ The results are reported in Table 5.

Table 5.

Collinearity diagnostics.

Variables	Collinearity statistics
Variables	Tolerance	VIF
ECP	0.802	1.669
ENP	0.826	1.225
SCP	0.889	1.967
EMP	0.865	1.759
CNS	0.857	1.367
SOC	0.932	1.663
STK	0.832	1.432

Factor analysis

An EFA was carried out to obtain the contributing design structure. In EFA, the relationship and groupings of variables are determined by the correlations between the variables.⁶² A maximum likelihood method was applied to extract the variables, which was then transformed with the Promax Kaiser normalization to get more accurate findings. In order to determine the intensity of the variables, the Eigenvalues were used. According to the test eigenvalues, more than 60.66 percent of variance was explained by the factor that measured individual variables. It was determined that the values at 0.928 were greater than 0.6 using the Kaiser–Meyer–Olkin test (see Table 6).⁶³ Thus, all factorial analyses were able to be conducted using this sample. Further, BTS generated an impressive value of 9308.76, which meets the requirement for EFA. In Table 7, communalities statistics show that all indicators are above the suggested threshold value 0.4.⁶⁴ Based on all of these findings, it is clear that the data is valid and warrant further investigation.⁶⁵

Table 6.

Kaiser–Meyer–Olkin (KMO) and Bartlett's test.

KMO and Bartlett's test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy		0.928
Bartlett's Test of Sphericity	Approx. Chi-Square	9308.76
	df	437
	Sig.	0.000

Notes: df: Degree of freedom, Sig: Significance.

Table 7.

Communalities findings.

Variables	Communalities
Variables	Initial	Extraction
ECP	1	0.674
ENP	1	0.791
SCP	1	0.816
EMP	1	0.697
CNS	1	0.752
SOC	1	0.890
STK	1	0.973

Notes: Extraction Method: Maximum likelihood.

Measurement and structural model analysis

To ensure the validity of the results, the quantitative and structural models were explicitly calculated.⁶⁶ This research used Confirmatory factor analysis (CFA) to determine the model. Due to the high f-value, the analysis revealed that all links are linear. In addition, numerous fitness tests were used to validate the closeness of the data to the structural model of the study. The fitness indices (i.e., CFI = 0.967, NFI = 0.945, IFI = 0.958, TLI = 0.952, GFI = 0.967, RMSEA = 0.047, X²/df = 1.487, and SRMR = 0.042) were also according to the suggested criteria value.⁶⁷

After controlling for demographic variables, a positive correlation was found (β = 0.248, p < 0.01) between ECP and EMP, supporting H1. H2 was also accepted, as a positive correlation was found (β = 0.239, p < 0.05) between ECP and CNS. In the same vein, we accepted H3 as well because a positive correlation was found (β = 0.312, p < 0.01) between ECP and SOC. Similarly, ECP positively affects STK (β = 0.125, p < 0.05) and RGI (β = 0.549, p < 0.01). As a result, we accepted H4 and H5.

In addition, H6 was accepted, as a positive linkage was found (β = 0.343, p < 0.01) between ENP and EMP. A positive relationship was also found between ENP and CNS (β = 0.147, p < 0.05), ENP and SOC (β = 0.458, p < 0.01), ENP and STK (β = 0.593, p < 0.01), and ENP and RGI (β = 0.257, p < 0.01). Consequently, we accepted hypotheses 7, 8, 9, 10. A significant linkage between SCP and EMP was found (β = 0.487, p < 0.01), supporting H11. A significant linkage was also observed between SCP and CNS (β = 0.164, p < 0.05), supporting H12. Similarly, positive linkages were observed between SCP and SOC (β = 0.238, p < 0.05), SCP and STK (β = 0.043, p < 0.1), and SCP and RGI (β = 0.126, p < 0.05), supporting hypotheses 13, 14, and 15. Table 8 illustrates the results of the hypotheses Figure 2.

Table 8.

Hypotheses’ findings.

Hypothesis	Structural paths	β-coefficient	t-value	Sig.	Decision
H1	ECP → EMP	0.248	3.385	***	Supported
H2	ECP → CNS	0.239	3.237	**	Supported
H3	ECP → SOC	0.312	4.695	***	Supported
H4	ECP → STK	0.125	2.063	**	Supported
H5	ECP → RGI	0.549	6.579	***	Supported
H6	ENP → EMP	0.343	4.906	***	Supported
H7	ENP → CNS	0.147	2.171	**	Supported
H8	ENP → SOC	0.458	5.239	***	Supported
H9	ENP → STK	0.593	6.798	***	Supported
H10	ENP → RGI	0.257	3.771	***	Supported
H11	SCP → EMP	0.487	5.274	***	Supported
H12	SCP → CNS	0.164	2.267	**	Supported
H13	SCP → SOC	0.238	3.214	**	Supported
H14	SCP → STK	0.043	1.972	*	Supported
H15	SCP → RGI	0.126	2.139	**	Supported

Notes: ***p < 0.01, **p < 0.05, *p < 0.1.

Discussion

First, the three practices of green finance on CSR regarding employees were investigated. Considering the link between the economic practices and CSR towards employees, it is claimed that the economic practices are contributing component since a positive and substantial association has been identified (β = 0.248, p < 0.01). This indicates that a 1% increase in the green financing's economic practices might increase 24.8% in CSR regarding employees. In other respects, when extra resources are invested in green financing that encompasses economic issues, the CSR regarding employees will be enhanced.⁸ Likewise, concentrating on the link between the environmental practices and CSR regarding employees, the environmental practices are a significant component as it has been determined to have a significant positive association (β = 0.343, p < 0.01). This indicates that a 1% improvement in the environmental practices of green financing might result in a 23.9% increase in CSR regarding employees. In other words, when extra resources are invested in green financing that includes environmental elements, employees’ CSR will be enhanced.⁶⁸

Concentrating on the interaction between green financing's social practices and CSR regarding employees, it is noted that the social practices are also a key component, as it has been discovered to have a significantly positive association with CSR (β = 0.487, p < 0.01). It suggests that a 1% development in the green financing's social practices might increase 48.7% in CSR regarding employees. Moreover, when extra resources are invested in green financing that encompasses social elements, the CSR regarding employees will be enhanced.⁸ These advancements may include increasing remuneration to a reasonable rate; giving equality of opportunity to everyone regardless of race, caste, and gender; supporting the development and learning for environmental preservation so that employees’ skills are enhanced, through which the enterprises will be benefited ultimately, as in the automobile sectors.

Second, the three practices of green financing concerning CSR regarding consumers were investigated. Concentrating on the link between the economic practices and CSR regarding consumers, it is claimed that the economic practices are a supporting component since a significantly positive association has been identified (β = 0.239, p < 0.05). This indicates that a 1% increase in the economic practices of green financing might result in a 23.9 percent improvement in CSR regarding consumers. In other terms, when extra resources are invested in green financing that encompasses economic issues, the CSR regarding consumers will be enhanced.⁸ Correspondingly, concentrating on the link between the CSR regarding consumers and environmental practices of green financing, the environmental practices are claimed to be a contributory component. It has been proven to have a significant and positive association with CSR (β = 0.147, p < 0.05). This indicates that a 1% increase in the green financing's environmental component might result in a 14.7% improvement in CSR regarding consumers. In other respects, when extra resources are invested in green financing that addresses environmental concerns, the CSR regarding consumers will be enhanced.⁴

Social practices are also considered contributing components regarding the link between green financing's social practices and CSR regarding consumers since they have a significant positive association (β = 0.164, p < 0.05). This indicates that a 1% enhancement in the green financing's social practices might result in an 16.4% increase in CSR regarding consumers. In other utterance, when extra resources are invested in green financing that encompasses social issues, the CSR regarding consumers will be enhanced.⁸ These enhancements may include enhancing customer happiness by supplying items that meet their specifications, resolving complaints effectively, interacting with them more transparently, and providing eco-friendly services.

Third, the green financing practices (economic, social, and environmental) concerning CSR regarding society was investigated. Concentrating on the link between economic practices and CSR, economic practices are a contributing element since they have a significant beneficial association with CSR (β = 0.312, p < 0.01). This indicates that a 1% improvement in the economic practices of green financing might result in a 31.2% increase in CSR in society. In other instances, when more excellent resources are invested in green financing that encompasses economic aspects, CSR regarding society will be enhanced.⁸ Likewise, when considering the link between green financing's environmental practices and CSR towards the society, environmental practices are contributing component. It has been discovered to have a substantial and beneficial connection (β = 0.458, p < 0.01). This suggests that a 1% increase in the environmental practices of green financing might result in a 45.8 percent increase in CSR regarding the society. A more significant investment in green financing that encompasses the environment would enhance a company's CSR regarding society.⁶⁹

In addition, when considering the link between green financing's social practices and CSR regarding the society, the social practices are contributing component. This has been discovered to have a substantial and beneficial connection (β = 0.238, p < 0.05). This indicates that a 1% increase in the social component of green financing might result in a 23.8% increase in CSR in society. In other respects, a more significant investment in green financing that encompasses social elements would enhance a company's CSR for society.⁸ These enhancements contribute and giving to the society back by, for example, helping the poor and needy, making investments in cultural activities and social gatherings from which values and norms are inferred and maintained, donating to and has participated in projects that protect and preserve the ecosystem and natural state, etc.

Fourth, the green financing practices (economic, social, and environmental) concerning stakeholders’ CSR was investigated. Based on the link between the green financing's economic practices and CSR to the stakeholders, the economic practices are contributing component as it has a solid and positive relationship (β = 0.125, p < 0.05). This indicates that a 1% increase in the economic component of green financing might result in a 12.5% improvement in CSR regarding stakeholders. In another sense, when extra resources are invested in green financing that includes the economic elements, the CSR regarding stakeholders will be enhanced.⁴ Correspondingly, concentrating on the link between green financing's environmental practices and CSR regarding stakeholders, the environmental practices have been proven to have a solid and favorable association (β = 0.593, p < 0.01). This indicates that a 1% increase in the environmental aspect of green financing might increase CSR to stakeholders by 59.3%. In other respects, extra investment in green financing that encompasses the environment would enhance a company's CSR toward its stakeholders.⁶⁹

Similarly, concentrating on the link between green financing's social practices and a company's CSR toward its stakeholders, it is noted that the social practices are also contributing components since it has been discovered to have a significant positive association (β = 0.043, p < 0.1). This suggests that a 1% increase in the social component of green financing might result in a 4.3% improvement in CSR toward stakeholders. In other aspects, when extra resources are invested in green financing that encompasses social issues, the company's CSR towards its stakeholders will be enhanced.⁸ These enhancements can take the form of channeling the financing in such a way that it safeguards the financial performance of the auto manufacturers, which in turn protects the stakeholders, enhancing the accountability of the operational processes so that stakeholders are constantly updated, protecting their benefits and rights, and making investments in green activities while striking a balance among the environment and the society.

Finally, the green financing practices (economic, social, and environmental) concerning CSR's regulatory issues were examined. Concentrating on the regulatory elements of the link between green financing's economic practices and CSR, the economic practices are contributing component since it has a significantly positive association with CSR (β = 0.549, p < 0.01). This indicates that a 1% increase in the economic practices of green financing might result in a 54.9% increase in CSR's regulatory issues. In other terms, when extra resources are invested in green financing that includes the economic practices, the CSR regarding regulatory issues will be enhanced.⁸ Likewise, concentrating on the link between the environmental component and CSR in terms of regulatory issues, environmental practices are a contributing element as they have a significant positive association (β = 0.257, p < 0.01). This indicates that a 1% increase in the environmental component of green financing might result in a 25.7% increase in CSR's regulatory dimensions. In other respects, extra investment in green financing that encompasses the environment would enhance CSR in regulatory issues.⁴ Concentrating instead on the link between CSR in terms of regulatory issues and social practices, the social practices have been shown to have a significantly positive relationship (β = 0.126, p < 0.05). This indicates that a 1% increase in the social practices of green financing might result in a 12.6 percent increase in CSR's regulatory issues practices. In other terms, when an extra investment is made into green financing that includes the social practices, the CSR concerning regulatory issues will be enhanced.⁶⁹ Compliance with the laws and regulations, prompt payment of taxes and levies, avoidance of environmental infractions, and protection of the duties and rights of all stakeholders, comprising consumers, stakeholders, vendors, community, etc., are the examples of such enhancements.

Conclusions and future directions

This research tries to address concerns about the contribution of green financing and its three practices to the automobile industry's CSR goals. For this objective, a quantitative research methodology was used. The automobile sector's consumers provided answers that were compiled and examined statistically using PLS-SEM. According to the findings, green financing practices contributed and excelled in all sub-categories of CSR. According to the results, it is suggested that businesses in automobile sectors and general, in particular, commit more monetary resources to CSR; thus, all stakeholders in society are cared for.

Furthermore, as green finance has evolved and been scientifically documented as a possible method for achieving sustainability, it requires regulatory regulations. Furthermore, from a triggering perspective, green financing and CSR could start extra encouragement and patterns for other companies in the sector; consequently, regular reporting in the financial statements and promotion of activities related to the CSR must be accomplished and guaranteed so that more firms can be motivated for the same activities. Finally, auto manufacturers must provide more consumer-friendly finance goods for green and clean technological advancement endeavors, eco-friendly enterprises, etc.

The study has some limitations and future research directions. Firstly, the sample size of 319 is not enough for the generalizability of the findings. However, it is not possible to expand the sample size at this stage, when the survey has been completed and analysis had already been done. Subsequent studies can tackle this limitation by expanding the sample size in the same and other geographical locations. secondly, it is advocated that a similar research be examined in the setting of other sectors to confirm its applicability and validity. Thirdly, investigating nonlinear links between investigated phenomena may also add to the body of knowledge. Fourthly, machine learning-based artificial intelligence-oriented approaches must be included in a comprehensive data analysis. Finally, expanding the present framework by adding marketing might potentially relate to customers’ satisfaction, equity, brand image, etc., in a significant way.

Supplemental Material

sj-docx-1-eae-10.1177_0958305X221133258 - Supplemental material for Towards sustainable environment: Unleashing the mechanism between green finance and corporate social responsibility

Supplemental material, sj-docx-1-eae-10.1177_0958305X221133258 for Towards sustainable environment: Unleashing the mechanism between green finance and corporate social responsibility by Xuesen Cai and Xiaowei Song in Energy & Environment

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Xuesen Cai

Supplemental material

Supplemental material for this article is available online.

Xuesen Cai is a Phd student in Management. His area of research is renewable energy and green development

Xiaowei Song is a Phd student in Management. His area of research is strategic management and green development.

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