How GHRM creates firm value: a firm-level explanation through carbon footprint reduction

Purpose This study explores how Green Human Resource Management (GHRM) translates into measurable organizational outcomes by examining the mediating role of carbon footprint (CF) reduction in the relationship between GHRM and financial performance. Design/methodology/approach Drawing on the Ability–Motivation–Opportunity (AMO) framework, this study develops and tests a firm-level model linking GHRM practices, CF reduction, and financial performance. Using data from 1,845 large firms, Structural Equation Modeling (SEM) is applied to examine the mediating role of externally verified CF (CO2e emissions) in the relationship between GHRM and financial performance (ROA, ROE, and ROS). Findings GHRM significantly reduces firms' CF, with the motivation dimension emerging as the most robust predictor of environmental outcomes. Mediation analysis confirms that CF reduction serves as a core mechanism transforming behavioral green initiatives into market- and stakeholder-related financial gains (ROE and ROS), while the direct effect on asset efficiency (ROA) requires longer operational horizons. Research limitations/implications This study focuses on large firms, which are more likely to verify CF externally, restricts generalizability to SMEs. Future research should adopt longitudinal and multi-method designs, examine sectoral variations, and explore how cultural and organizational contexts shape GHRM effectiveness (Mousa and Othman, 2020). Comparative studies across emerging and developed economies could clarify whether external verification mitigates institutional voids equally across contexts. Practical implications From a practical standpoint, these findings suggest that GHRM should not be treated as symbolic compliance but as a strategic driver of efficiency, legitimacy, and profitability. HR leaders should embed sustainability across the talent management cycle – from recruitment and training to evaluation and rewards – explicitly linking practices to measurable CF reduction. This requires both technical capacity and cultural alignment: selecting candidates who share sustainability values, fostering motivation through incentives, and empowering leaders as catalysts for innovation and inclusion. Opportunities provided through collaborative teams can sustain engagement and reduce the risk of employee fatigue (Dumont et al., 2017). Social implications By linking GHRM practices to externally verified CF reductions, this study highlights how organizations can move beyond symbolic compliance and build objective legitimacy. Such credibility strengthens public trust, reduces reputational risks, and aligns corporate behavior with societal expectations for transparency and sustainability. Verified reductions also contribute to broader social welfare by mitigating environmental impact, enhancing quality of life, and fostering consumer and investor confidence. Furthermore, the findings encourage policymakers to promote standardized disclosure, which can improve accountability and comparability across firms. Overall, the study underscores how measurable sustainability outcomes generate tangible social value. Originality/value This study contributes to HRM research by shifting the focus from whether GHRM influences performance to how it generates measurable organizational value. It offers a firm-level explanation informed by AMO-based behavioral logic and introduces CF as an objective and auditable mediator, addressing limitations associated with perceptual measures and strengthening the theoretical linkage between HR practices and organizational performance.