From ESG to value: how green innovation transforms the sustainability trajectory of construction firms

Purpose This study develops an innovative model to assess the impact of environmental, social and governance (ESG) practices on sustainability performance (SP) and firm value (FV), incorporating the mediating role of green innovation performance (GIP), an underexplored aspect, particularly in the context of construction enterprises. Design/methodology/approach Utilizing data from construction professionals in Vietnam, this study adopted the structural equation modeling (SEM) approach to rigorously evaluate the hypothesized model's validity and reliability. Findings The SEM results indicated three interesting and valuable findings: (1) ESG practices significantly promote GIP within construction firms, underscoring the role of sustainable and responsible business practices in fostering innovation; (2) GIP as a crucial factor for enhancing both sustainability outcomes and the overall value, emphasizing its dual impact on environmental and economic objectives; and (3) GIP acts as a mediator, strengthening the relationship between ESG practices and positive firm outcomes. Originality/value Theoretically, this study advances ESG knowledge by comprehensively examining indicators that drive SP and FV within the construction industry and by uncovering the mediating role of GIP in these relationships. Practically, it provides actionable recommendations to boost sustainability outcomes and FV through ESG and green innovation strategies, offering insights that are valuable for Vietnam and similar emerging economies.