ABSTRACT The aim of this paper is to investigate how corporate liquidity influences firms' engagement with SDG 8, which is related to decent work and economic growth, within the European Union context. Using 5154 firm‐year observations from 952 EU listed companies between 2010 and 2024, it uses a dynamic random‐effects probit model with Mundlak correction and a control function approach in order to address endogeneity and persistence in SDG adoption. The results indicate that liquidity enhances short‐term SDG 8 adoption by providing financial flexibility to invest in workforce and productivity, while sustained excess liquidity weakens long‐term SDG 8 commitment. Furthermore, governance mechanisms, in particular, CSR committees, significantly strengthen the translation of financial capacity into sustainable outcomes. These findings emphasize the dual role of liquidity as an enabler and constraint, where governance quality decides whether financial resources are effectively mobilized toward achieving inclusive and sustainable economic growth.
Dsouza et al. (2026) studied this question.