Does stakeholder pressure influence firms environmental, social and governance (ESG) disclosure? Evidence from Ghana

Alessa, Noha; Akparep, John Yaw; Sulemana, Inusah; Agyemang, Andrew Osei Article Does stakeholder pressure influence firms environmental, social and governance (ESG) disclosure? Evidence from Ghana Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Alessa, Noha; Akparep, John Yaw; Sulemana, Inusah; Agyemang, Andrew Osei (2024) : Does stakeholder pressure influence firms environmental, social and governance (ESG) disclosure? Evidence from Ghana, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-22, https://doi.org/10.1080/23311975.2024.2303790 This Version is available at: https://hdl.handle.net/10419/326004 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 Does stakeholder pressure influence firms environmental, social and governance (ESG) disclosure? Evidence from Ghana Noha Alessa, John Yaw Akparep, Inusah Sulemana & Andrew Osei Agyemang To cite this article: Noha Alessa, John Yaw Akparep, Inusah Sulemana & Andrew Osei Agyemang (2024) Does stakeholder pressure influence firms environmental, social and governance (ESG) disclosure? Evidence from Ghana, Cogent Business & Management, 11:1, 2303790, DOI: 10.1080/23311975.2024.2303790 To link to this article: https://doi.org/10.1080/23311975.2024.2303790 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. Published online: 05 Feb 2024. Submit your article to this journal Article views: 8411 View related articles View Crossmark data Citing articles: 31 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 ACCOUNTING, CORPORATE GOVERNANCE & BUSINESS ETHICS | RESEARCH ARTIClE Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2303790 Does stakeholder pressure influence firms environmental, social and governance (ESG) disclosure? Evidence from Ghana Noha Alessaa, John Yaw Akparepb, Inusah Sulemanac and Andrew Osei Agyemangb aDepartment of accounting, College of Business administration, Princess nourah bint abdulrahman university, Riyadh, saudi arabia; bschool of Business, s.D. Dombo university of Business and integrated Development studies, Wa, ghana; cschool of Business and Law, university for Development studies, tamale, northern Region, ghana ABSTRACT In the era of climate change, stakeholders are becoming more concerned about the sustainability disclosure of businesses. However, for developing economies like Ghana, studies on stakeholders’ pressure and sustainable development has not received much attention. Hence, this study examines the influence of stakeholders’ pressure on sustainability disclosure and employed green technological innovation (GTI) as a mediating factor. The study focused on mining and manufacturing firms because their processes are known to release carbon dioxide, create waste. The data utilize in this study was collected from 383 respondents in Ghana via online questionnaires. PlS-SEM was used to analyze the data and tested the hypothesis for the study using SMART-PlS 4. The results demonstrated that stakeholder pressure substantially improves sustainability disclosure performance. Also, the results revealed that a firm’s GTI mediates the connection between stakeholder pressure in terms of shareholder and consumer pressures. However, government pressure and sustainability disclosure were found to be insignificant. The study recommends that managers should incorporate GTI into the product design and manufacturing process since it enables firms not only fulfill their client’s needs but also reduce their environmental impacts, like the production of carbon dioxide and solid debris. 1. Introduction Almost all of the world’s largest firms now regularly provide sustainability reports that outline their operations and the impacts they have had in the areas of environment, society, and governance (Agyemang et al., 2023a). Major firm publishes its annual report detailing the impacts of their business operations on society, the environment, and the economy (Wiredu et al., 2023). Environmental, social, and governance (ESG) disclosure has increased in importance for almost all economies as people throughout the world are concerned about the global ecological challenges and the associated need to preserve the ecosystem. Hence, several firms are trying to be more accountable and environmentally friendly. To clearly understand and share their effect on ESG concerns, businesses and governments around the world seek guidance from groups like the Global Reporting Initiative (GRI). Even as firms may devise strategies to enhance their ESG reporting to compete in the global market, stakeholders may put pressure on businesses to reveal more ESG information. A firm may show the public that it is not running its operations just for profit at the expense of its responsibilities to its customers, workers, the environment, and society by reporting ESG reports. There are several advantages to incorporating sustainability into business strategy and practices and enhancing sustainability reporting, including increased transparency, enhanced brand value, improved reputation and legitimacy, increased employee and customer loyalty, lower costs, better business practices, improved © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group. CONTACT inusah sulemana [email protected]om school of Business and Law, university for Development studies, tamale, ghana https://doi.org/10.1080/23311975.2024.2303790 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY Received 9 October 2023 Revised 1 January 2024 Accepted 4 January 2024 KEYWORDS Developing economy; green technological innovation; stakeholders pressure sustainability disclosure REVIEWING EDITOR Collins Ntim, University of Southampton, United Kingdom of Great Britain and Northern Ireland SUBJECTS Accounting (Sustainability Reporting) 2 N. AlESSA ETAl. firm performance and valuation, and the creation of competitive advantage (Sanchez-Planelles et al., 2020, Menassa & Dagher, 2020). Firms in developing economies are increasingly under scrutiny from owners and other interested parties who want to know more about the value they provide and the consequences of their actions for the natural world and the community. A more transparent and consistent reporting system has also been highlighted as an area of emphasis to improve the performance of firms and attract investors to the firms (Mensah et al., 2017). Hence, businesses are becoming more transparent about their sustainability practices and adopting stricter measures of self-regulation as a consequence of stakeholder engagement (Maama & Mkhize, 2020). Thus, firms’ ESG disclosure must evolve and advance due to a growing recognition that the opportunities and issues facing a firm’s long-term value are far more nuanced and complex than financial statements alone can capture. Previous studies have paid attention to stakeholder demands since they are the primary driver of sustainability (Higgins etal., 2020; lulu, 2021). However, none of these studies considered the mediating role of technological innovation which is a major factor of sustainability reporting. Moreover, (Ramadhini et al., 2020; Krasodomska & Zarzycka, 2021) studies were centered on developed economies using secondary data and relying on the EKC theory. To the best of our knowledge, none of the earlier studies have considered developing economies especially from Sub-Saharan Africa (SSA). Despite the premise that, a firm can have a beneficial and adverse impact on its various stakeholder groups, few of the studies focused on stakeholder pressure and ecological reporting for developed economies. Additionally, incompatible proof exists regarding the impact of particular stakeholder demands even though previous studies have found that stakeholder pressures generally influence sustainability disclosure (Rudyanto & Veronica Siregar, 2018). This necessitates more investigation into the relationship between stakeholders pressures (SP) and sustainability disclosure (SD) using primary data from a developing country in SSA. Also, it is not explicit how SP affects SD in existing literature, which is an open question in this study. The few known studies have centered on transparency and the value of sustainability reports (Higgins et al., 2020; lulu, 2021). Therefore, the goal of this study is to close a gap between existing studies by examining how pressure from stakeholders affects the degree of SD in Ghana. This study aims to investigate how stakeholder pressure influences sustainability disclosure in Ghanaian traded firms. The unique goals of the study are identifying the influence of stakeholder pressure on sustainability disclosure in a developing economy in SSA. Establishing the impact of stakeholder pressures on green technological innovation. Examining the mediating role of green technological innovation between stakeholders’ pressure and sustainability reporting. The theoretical inspiration of the study is rooted in stakeholder theory and institutional theory. The stakeholder theory, suggest that firms are influenced by the expectations and demands of various stakeholders, while institutional theory emphasizes the importance of external forces, cultural expectations and institutional norms in determining corporate behaviors. By incorporating these two theories shed lights on how different stakeholders influence firms’ behavior. To better understand how stakeholder pressure affects sustainability reporting, the study relied on first-hand data and utilized the partial least squares structural equation model method. The data analysis was conducted using Smart PlS, version 4.0 which the authors have obtained a copyright license. The results revealed that stakeholder, government, and customer pressures significantly influence sustainability disclosure performance. Also, the study discovered that green technological innovation plays a significant mediating role between shareholder pressure, customer pressure, and sustainability disclosure, and an insignificant mediating role between government pressure and sustainability disclosure. The outcome of the study throws light on the different stakeholders’ pressure on sustainability disclosure and provides policy guide for businesses on which of the stakeholders’ pressure to consider so as to improve sustainability disclosure. This study’s originality cannot be overstated; it adds to the existing work of knowledge regarding stakeholder pressure and sustainability disclosure in distinct ways. First, to the best of our knowledge, the relationship between stakeholder pressures and green technological innovation has not been thoroughly examined in developing economies. This study therefore offers an in-depth insight into how green technological innovation mediates the relationship between stakeholder pressure and sustainability disclosure in a developing economy. This differs from earlier studies that only looked at the direct COGENT BUSINESS & MANAGEMENT 3 impact (lulu, 2021, Vitolla etal., 2019, Ramadhini etal., 2020). Hence, the study bridges the gap between technological innovation adoption and sustainability practices, recognizing the pivotal role of green technological innovation in shaping a firm environmental, social and governance disclosure. This integration is crucial for contemporary businesses navigating the intersection of technology and sustainability. Second, the study’s originality lies in incorporating both process and product innovations within the realm of green technological innovation. Many studies on ESG disclosure focuses predominantly on product innovation (li et al., 2018, Jayaraman et al., 2023), often overlooking the significance of process innovation in contributing to sustainable business practices. This dual focus adds complexity and depth to the analysis, recognizing that a firms’ environmental and social effects and reporting can be significantly influenced by innovation in the product and the process in which it operates. Consequently, the current paper seeks to make the following contributions to the existing literature. First by introducing green technological innovation as a mediating variable, the study contributes to a more advanced understanding of the mechanisms through which stakeholder pressure influences ESG disclosure. It goes beyond establishing a direct relationship and explores the role of technological-driven sustainability initiatives in mediating this influence. Second, by focusing on Ghana, the study adds a contextual dimension to institutional theory, acknowledging that the regulatory and normative environment in emerging markets may differ significantly from that of developed economies, hence contributing to the broader understanding of how institutional factors interact with stakeholder pressures to shape ESG disclosure practices in a diverse global setting. Third, the study’ inclusion of both process and product innovations as components of green technological innovation provides a holistic view. This recognition acknowledges that sustainable practices extend beyond the final product and encompasses the entire production process. Such a comprehensive perspective contributes to a more nuanced understanding of the ecofriendly initiatives within firms. Fourth, the study’s results of a positive and significant influence of stakeholder pressure on ESG disclosure contributes empirical validation to existing literature that suggest a similar relationship. This supports and reinforces the idea that stakeholder pressure serves as a catalyst for increased transparency and disclosure in environmental social, and governance domains. The authors divided this article into seven distinct components. Section 1 provided an introduction. Section 2 looks at the contextual factors by leveraging regulatory policies and requirements of ESG disclosure practices and advancements. Section 3 pertains to the theoretical literature review. Section 4 entails an empirical review of relevant studies, formulating hypotheses, and establishing a conceptual framework. The research design for the study is elaborated on in section five. The sixth section of the study presents the empirical results and provides a comprehensive analysis and discussion of the obtained data. The seventh section encompasses a concise summary and a sweeping conclusion. 2. Background Recently, there has been a notable transformation in the global business environment, characterized by a growing focus on corporate responsibility and sustainability practices (Imperiale et al., 2023). In contemporary business evaluation, firms are no longer assessed based only on their financial success; their influence on the environment, society, and governance practices is now considered (Cicchiello et al., 2023). The emerging of the ESG framework has been a direct consequence of this revolution. This framework is an evaluative tool for assessing a firm’s dedication to sustainable practices and ethical conduct (Abeysekera, 2022). Ghana, a country in West Africa, has seen tremendous economic expansion and advancement lately. Corporate social responsibility and sustainable practices are becoming increasingly important as the nation develops (Tetteh et al., 2024). Ghana’s business environment is distinguished by a blend of traditional and modern sectors, which mirrors the country’s many economic pursuits. Ghana has witnessed an increasing focus on adopting sustainable business practices, evidenced by the implementation of regulatory frameworks and policy initiatives (Wiredu etal., 2023). The government has been aggressively advocating for the preservation of the environment, promoting social responsibility, and implementing good governance. This phenomenon is apparent in the formulation and execution of rules and regulations designed to incentivize enterprises to embrace and divulge environmental, social, and governance 4 N. AlESSA ETAl. (ESG) practices (Faseyi et al., 2023). The implementation of the Ghana Green label Certification Scheme and the regulatory measures imposed by the Environmental Protection Agency, such as environmental impact assessments, exemplify the government’s dedication to promoting environmentally sustainable business practices (Otitolaiye et al., 2023). The Ghana’s Securities and Exchange Commission has undertaken initiatives to incorporate Environmental, Social, and Governance (ESG) factors into firm reporting, thereby conforming to prevailing international patterns. listed firms are now required by the Securities and Exchange Commission (SEC) to publish their ESG practices in their annual reports (Kaur, 2021). The purpose of these standards is to guarantee that businesses provide stakeholders with accurate, trustworthy, and comparable ESG information (Jahid etal., 2023). SEC is a significant force behind promoting ESG disclosure among businesses. Firms are encouraged to provide pertinent information about their environmental effect, social activities, and corporate governance practices using rules and regulations published by the SEC (Annan, 2023). Ghana has undergone economic reforms to attract foreign investment and promote sustainable investment. These reforms are initiatives to enhance accountability, transparency, and corporate governance (Anaman etal., n.d.). Ghana’s business community increasingly realizes the importance of following global best practices to boost competitiveness and access outside markets (Simpson et al., 2022). Hence, ESG disclosure in Ghana goes beyond merely abiding by the rules and regulations (Annan, 2023). It is an opportunity for firms to show that they are dedicated to sustainability, ethical business conduct, and generating long-term value for all parties involved. Firms may improve their reputation, draw in socially aware investors, and support Ghana’s general sustainable growth by providing ESG information. ESG disclosure is an essential aspect of corporate transparency and accountability in Ghana (Appiah-Konadu et al., 2022). It enables firms to communicate their commitment to environmental stewardship, social responsibility, and strong corporate governance practices. The increasing desire for openness and stakeholder accountability is a crucial driving force behind adopting ESG disclosure practices in Ghana (Aboagye‐Otchere et al., 2020). There is a growing emphasis among investors, consumers, workers, and the general public on the environmental and social consequences of organizations alongside their governance strategies (Faseyi et al., 2023). Ghanaian enterprises acknowledge the need to cultivate trust, maintain a favorable image, and attract enduring investments by disclosing their environmental, social, and governance (ESG) performance (Jahid et al., 2023). Moving forward the nation has a profound cultural legacy that places importance on active participation within society, managing the environment, and fulfilling social obligations (Welbeck, 2017). Numerous Ghanaian enterprises acknowledge the significance of harmonizing their operational strategies with prevailing cultural norms (Arthur et al., 2017). Consequently, they place a high priority on disclosing their environmental, social, and governance (ESG) practices as a means to showcase their dedication to fostering sustainable development. In addition, it is noted that some sectors, including mining and agriculture, substantially influence the natural environment and nearby populations (Amoako et al., 2022). These sectors are seeing heightened scrutiny to publicly report their environmental, social, and governance (ESG) performance and address adverse social and ecological consequences (Famiyeh et al., 2021). 3.Theoretical literature review In the following sub-sections, the theoretical justification is presented. 3.1. Stakeholder theory (ST) Stakeholder theory is one of the most common ideas to explain why firms report on ESG issues. The stakeholder theory states that businesses have duties to all other stakeholders interested in the business besides owners, whose only goal is to make as much profit as possible (Freeman, 1984). According to stakeholder theory, this goal cannot be reached by ignoring the needs of other stakeholders. This means that while firms are responsible to their investors or stakeholders, they must also balance the interests of many different stakeholders whose actions can affect or be affected by the firms’ actions (Dissanayake et al., 2019). To demonstrate to stakeholders that their expectations are being acknowledged, firms COGENT BUSINESS & MANAGEMENT 5 actively participate in and provide an account of environmental, social, and governance (ESG) matters. This may be done by including it in the annual reports or by producing separate sustainability reports (Abeysekera, 2022). Businesses strive to minimize information asymmetry by reporting non-financial matters such as social and environmental activities and repercussions to convey ESG information effectively (Alsahali & Malagueño, 2022). ESG reporting is used as a means of actively involving various stakeholder groups that are considered vital for the organization’s ongoing operations. Organizational managers are compelled by stakeholder theory to respond more quickly to the outside world’s demands. Thus, stakeholder theory states that firms should act in a good and fair way towards stakeholders’ expectation, based on what the stakeholders think is right. It builds on legitimacy theory, which also focuses on firms behaving ethically (Osei etal., 2023). Stakeholders lead organization managers by advising them on how to live the firm’s values (Wen et al., 2023). This orientation helps them discern between right and sinister. Stakeholders provide an orientation to help firms preserve and maintain the quality of life while continually improving it, such that it becomes critical to how businesses approaches the environment in their operations and disclose sustainability information (Zhou et al., 2022). According to stakeholder theory, businesses should prioritize cultivating positive relationships with all stakeholders (Osei etal., 2019). Thus, firms may be prompted to adopt and release sustainability reports in response to pressure from stakeholders. The firm’s sustainability reports are meant to be comprehensive sources of data on how the business’s operations affect the local community and the natural environment. Firms declare their efforts towards the global objectives as a means of discharging their responsibilities and gaining the approval and support of stakeholders. Studies related to ESG often use ST as an important theoretical framework. According to Agyemang et al. (2023b), to ensure firm sustainability, the firm must meet the expectations of its associates. The intricacy of ESG issues requires the involvement of many different parties if effective or sustainable answers are to be devised (Freudenreich et al., 2020). As a result of competing interests, leaders often must decide which ones to prioritize, ignore, back, or fulfill. Stakeholder interest balance is thus an important aspect to firms. 3.2. Institutional theory Institutional theory provides a holistic explanation on why a firm chooses a specific structure or method of reporting. Businesses whose principal activity is linked with greater ecological effects, like the mining sector, undergo greater pressure to operate ethically in the manner they do business than those with fewer ecological consequences (Simoni et al., 2020). According to institutional theory, entities within the same field tend to grow increasingly similar to one another due to the pressures they face, which include adopting institutional as well as social norms and standards to gain legitimacy to preserve access to resources. Isomorphism is a term used to describe this kind of standardization, and several types have been identified by: coercive (regulatory), mimetic (competition), and normative (market) (Kılıç et al., 2021). Coercive isomorphism arises when a firm is subjected to pressure from outside sources, such as shareholders or employees, or from the national decision and laws to alter its long-standing institutional norms (Herold, 2018). A firm may engage in mimetic isomorphism if its leaders believe that doing so would provide them an edge in the marketplace (Kılıç et al., 2021). One example of this is the adoption of corporate social responsibility reporting. Firms around the world are increasingly turning to the GRI standards for SD as an example of normative isomorphism, which refers to the pressure to implement organizational practices resulting from shared beliefs, typically from clients or vendors who require compliance with ecological and social standards (Tran & Beddewela, 2020). According to institutional theory, a firm’s corporate strategies are significantly impacted by its institutional environment, which consists of its rules, conventions, and social beliefs (Posadas et al., 2023). Nonetheless, this idea is comparable to the strategy supported by legitimacy theory. Similarly, Simoni etal. (2020) argued that, businesses must adhere to regional social norms, values, and beliefs to prosper. Building on this idea, institutional theory represents that a firm’s activities, efforts, and reports may lead to stakeholders having certain expectations. Therefore, implementing sustainability practices means 6 N. AlESSA ETAl. abiding by laws, social conventions, and values to enhance or preserve a firm’s reputation among stakeholders (Alatawi et al., 2023). 4. Empirical review and hypotheses development 4.1. Stakeholder pressure and sustainability disclosure The study of the factors that influence sustainability reports from businesses might benefit from the theoretical groundwork provided by stakeholder theory. According to stakeholder theory, managers may use stakeholders’ expectations (or output restrictions) as a benchmark for environmental performance when they see widespread consensus on the importance of environmental concerns (Sarkis etal., 2010). Efforts to incorporate environmental concerns and practices into strategic, tactical, and operational actions have increased as a response of rising challenges. Similarly, the legitimacy theory argues that businesses’ social practices should emphasize how firms respond to community expectations. As a result, a firm may need to explain how its actions align with social values since the community or stakeholders may react negatively, especially when there are discrepancies between firm and societal values (Alatawi et al., 2023). Therefore, businesses must adapt to societal demands to uphold their social standing and cultivate a relationship based on trust with stakeholders. Firms can better anticipate societal concerns by disseminating and publishing information about their sustainability issues in publicly accessible reports (Alatawi et al., 2023). Stakeholder theory was considered by Sarkis et al. (2010) while analyzing the implementation of sustainable measures in the Spanish automobile sector. Their results suggested that stakeholders may have varied effects given the particular scenario under consideration. Thus, there is a significant association between environmental demands across stakeholders and various groups’ stakeholder pressures on sustainability practices. Every decision made by the firm is a direct reflection of the majority shareholder’s desires (Raub & Martin-Rios, 2019). Therefore, shareholders need to exercise effective oversight of the firm’s management to decrease instances of concealing information and promote more comprehensive disclosures. Firms are being pushed to consider their broader social and environmental impacts as a result of shareholder pressure on sustainability, which is a welcome trend. Investors are beginning to see the potential of sustainability as a tool for creating a more equal and just society as well as a safer and more prosperous one. As a consequence, stakeholders are utilizing their voting power and other forms of influence to pressure businesses to improve their ESG effectiveness (Cadez et al., 2019, lee et al., 2018). The results by Chithambo et al. (2022) demonstrate that stakeholder pressure, as represented by environmental, consumer, employee, and shareholder pressures, significantly affect the environmental performance of manufacturing businesses listed on the Indonesia Stock Exchange (ISE). Government regulations are crucial factors for businesses to consider. Permits for doing business, labor laws, and other requirements have all been promulgated by various state institutions. As a result of increased public scrutiny and demands transparency, state authorities are putting pressure on business leaders to provide sustainability reports (lestari et al., 2021). The government and regulations may use a variety of tools to encourage businesses to take environmental protection measures. The advent of emission limits and environmental programs has put considerable regulatory pressure on many businesses in developed countries. Without the effect of legislation to force their acceptance, certain industries, like the energy industry, would not even be in existence. The use of force is often implicit in regulatory efforts. Because of the risk of fines, jail time, or other legal repercussions, businesses are compelled to comply with legal pronouncements by instituting internal sustainability policies that reduce emissions, resource usage, and waste during production (Esfahbodi et al., 2017). Moreover, rules place stress on businesses by necessitating the development of organizational responsibility reports that detail the infirm of external and internal sustainability measures. Hence, it stands to reason that coercive constraints from governments and regulators would have a detrimental impact on supplier sustainability cooperation, although some academics have claimed otherwise (Talbot et al., 2021). COGENT BUSINESS & MANAGEMENT 7 Customers are often regarded as the most influential stakeholder group (Chithambo etal., 2022). The ecological impact of products is increasingly communicated to consumers. Ecologically conscious customers are willing to pay more for green items that are offered by firms with a strong ecological reputation. So, there is an incentive for suppliers to implement sustainable practices to enhance their market performance and meet the needs of their customers. Customers on the B2B level often mandate that vendors have environmental certifications like ISO 14000. Recent studies by Gong etal. (2019) shows that consumer demands are crucial for encouraging businesses to build their sustainability capabilities and communicate sustainability to their supply chain collaborators through the use of various stakeholders’ pressure. Thus, it is anticipated that the adoption and execution of both inside and outside green initiatives would be favorably impacted by demands from customers. According to studies conducted by Ramadhini et al. (2020), external stakeholders, such as creditors and the media, impact social and environmental disclosure. In addition, studies by Fernandez-Feijoo et al. (2014) found that pressure from specific stakeholder groups—including customers, clients, employees, and the environment—raises the bar for report openness. Based on the above literature, the following hypotheses are developed: H1. Shareholder pressure significantly influences sustainability disclosure. H2. Government pressure has a positive and significant influence on sustainability disclosure. H3. Customer pressure has a positive and significant link with sustainability disclosure. 4.2. Stakeholder pressure and green technological innovation The institutional theory focuses on how the outside world affects green technologies. Green innovation may be seen from the perspective of analytical logic as a method of dealing with the demands of the customers and regulatory pressure. The goal is to make businesses adhere to social norms, regulatory requirements, and public perception (Berrone et al., 2013). Studies conducted by Rui and lu (2021) used a sample of 278 businesses to explore the driving mechanism of stakeholders’ regulatory, normative, and imitation pressures on firms’ green innovation, respectively. These three types of pressure come from the government, consumers, and rivals. The results of hierarchical regression analysis indicate that pressure from stakeholders may improve the environmental ethics of firms and the development of green technology. Similarly, Tian and Tian (2021) conducted a study to examine how green innovation emerges and affects a firm’s environmental performance. The empirical study results using 306 firms sample data demonstrate that stakeholder pressure favors firm sustainability performance and that responsible innovation is a partial mediating factor in this connection. In addition to confirming the logic of stakeholder theory, which predicted that stakeholder pressures would have a significant impact on firms’ decisions about green innovation (Cadez etal., 2019, lee et al., 2018), this finding also extends it by illuminating the heterogeneous influences of various stakeholder pressures on green product innovation. Following to the stakeholder theory, organizations should prioritize meeting the demands and expectations of all constituencies rather than just those of shareholders with financial stakes (Freeman, 1984). Hence, firm now includes green innovation strategies in its policies. Shareholder pressure on sustainability describes the rising movement of shareholders, notably institutional shareholders, to require businesses to disclose their ESG results and prioritize green technological innovations initiatives. As a consequence, shareholders are utilizing their voting power and other forms of influence to pressure businesses to improve their green technological innovation (Kılıç et al., 2021). Thus, firms are being pushed to consider their broader social and environmental impacts as a result of shareholder pressure on green technological innovation adoption, which is a welcome trend. Government pressure often describes governmental restrictions upon businesses, like environmental laws. Businesses must cease engaging in environmentally harmful activities and adopt green technological innovation practices to avoid government penalties and preserve regulatory flexibility. Numerous studies have supported this idea. For instance, it was discovered via a study of 92 industrial firms in Germany that the rigor of statutory ecological rules increased the possibility of implementing green innovation (Kammerer, 2009). In order to compete internationally, businesses must also adhere to 14 N. AlESSA ETAl. sustainability disclosure. This implies that, pressure from shareholders and consumer has a significant indirect impact on sustainability disclosure through green technological innovation. On the other hand, GTI showed a negligible mediation effect is observed between government pressure and sustainability disclosure denying the hypothesis 8. This clearly indicates that green technological innovation does not influence the relationship between government pressure and sustainability disclosure. 6.2.3. Goodness of fit After evaluating the importance of the path coefficient in the structural model, we determined the model’s goodness of fit (GOF). The R-square (R2) determination coefficient is the most widely applied criterion. According to Sahoo. (2019), R2 quantifies the explanatory power of the model. In general, R2 values of 0.25, 0.50, and 0.75 are regarded as weak, moderate, and significant, respectively (Sahoo, 2019). According to Hair (2020), R2 values fall into three categories: average (0.333), weak (0.190), and approximately large (0.670). Table 8 displays the constructs’ predictive power, as well as how effectively the explanatory variables of the model forecast results. For green technology innovation and sustainability disclosure, the results revealed a predictive capacity (R2) of 0.764 and 0.924, respectively. 6.2.4. Effect sizes Effect sizes quantify the degree to which an independent construct influences the dependent construct. An independent construct, or exogenous latent variable, has a little, medium or high effect on the dependent construct, with values falling between 0.020 and 0.150, 0.150 and 0.350 and 0.350 and above 0.350. Therefore, from Table 9 the independent constructs have varied effect on green technological innovation and sustainability disclosure. 6.3. Discussion Sustainability disclosure practices can be influenced by stakeholder pressure. Successful ecological sustainability is contingent upon interactions with businesses and constituents. As per the stakeholder theory, a firm’s relationship with its stakeholders is enhanced by its steadfast commitment to ecological initiatives or activities (Wiredu et al., 2023). Some previous studies have uncovered a positive and beneficial relationship between stakeholder pressure, green technology, and sustainability disclosure (Thomas et al., 2022; lulu, 2021). For instance, Chithambo et al. (2022) suggested that institutional shareholders affect a firm’s ESG performance, which is essential for long-term corporate sustainability. Given the purpose of the research, the study hypothesize that shareholder pressures have positive and substantial effects on sustainability disclosure. The analysis of the results confirmed that shareholder pressure is positively associated with sustainability disclosure. This implies that shareholders with voting rights can influence the executive decision to include ESG-related information in annual reports in order to enhance the firm’s image and economic viability over the long term. Our results were consistent with the assumption. Hence, the first hypothesis was accepted. Our result supports the stakeholder theory, which states that business entities have an Table 8. R-square. Constructs R-square R-square adjusted green technological innovation 0.764 0.763 sustainability disclosure 0.924 0.924 Table 9. effect size. Constructs CP gP gti sP sD CP 0.350 0.054 gP 0.030 0.543 gti 0.041 sP 0.090 0.294 sD COGENT BUSINESS & MANAGEMENT 15 obligation to all other groups or stakeholders who have a vested interest in the business apart from shareholders, and to fulfill this objective, firms engaged and disclosed information related to ESG to meet the requirement and interest of other stakeholders. Moreover, our results is consistent with the results by Rui and lu (2021), who concluded that shareholder pressure significantly affects the environmental performance of manufacturing businesses listed on the Indonesia Stock Exchange. The government has the power to impose rules that must be adhered to by all parties, including pressure to disclose sustainability information. Thus, government regulations may exert pressure on the business to publish sustainability reports. According to the institutional theory, firms may provide an increasing amount of ESG data to comply with legal requirements, avoid fines from environmental authorities, and legitimize their business practices (Posadas et al., 2023). Therefore, the study assumed that government pressure has a positive and significant influence on sustainability disclosure. This hypothesis is supported by the significance of the path coefficient results. Hence, the second hypothesis is accepted. The study’s results are consistent with (Eryadi et al., 2021) assertion that government pressure significantly improves the publication of sustainability reports. As stated in the hypothesis, customer pressure is positively related with sustainability disclosure. This is evidence to the legitimacy theory, which posits that firms report more on environmental, social, and governance issues to support and justify their continued existence (Orazalin etal., 2023). Businesses that want to compete in the global market may enhance their ESG reporting to draw in and keep environmentally conscious customers. Due to the fact that businesses with a high degree of consumer proximity tend to be more distinctive and are most likely to influence other businesses to fulfill their social and environmental obligations. These results indicate that consumers are extremely concerned with the quality of the products and services they purchase. In addition to purchasing affordable goods or services from a firm, consumers also pay attention to the product’s environmental friendliness, labor conditions, and other sustainability performance factors. Hence, the assumption is accepted. With regards to the relationship between stakeholders’ pressure and green technological innovation. We assumed that shareholder pressure has positive a significant impact on green technological innovation. The results of this study validated this hypothesis. This result aligns with an empirical study by Singh et al. (2022), which shows that stakeholders put pressure on green innovation capability. Shareholders may encourage managers to implement and practice green innovation since customers are interested and ready to pay more for environmentally friendly products. This will boost the economic performance of the firm as well as shareholders’ return on investment. Also, the author hypothesized that government pressure has a positive and significant relationship with green innovation. This claim is not supported by the study results. This may be as results of no governmental rules and regulations binding firms to adopt green technological innovation in their production process. A positive association between consumer pressure and green technological innovation is assumed as part of the study’s hypothesis. Path significance results supported the hypothesis. Given that customers may alter their consumption patterns from everyday goods to green technological or environmentally friendly products, they may do so. Many consumers are reticent to pay an extra cost or switch to a different product solely because a product is eco-friendly. In response, businesses may enhance green technological innovation to keep and attract additional consumers. An empirical piece of evidence indicates that customer pressure encourages firms to implement green innovations and has been shown to increase competition due to products that are distinct from competitors and enhance product image and firm credibility (Chu et al., 2019). Further, varying results are achieved concerning the mediating roles of green technological innovation. The study results revealed that green technological innovation does not mediate the relationships between government pressure and sustainability disclosure. This finding disapproved H7, which assumed that green technological innovation moderates the relationship between shareholder pressure and sustainability. However, the study results revealed that green technological innovation mediates the relationship between shareholder pressure, customer pressure and sustainability disclosure, validating H8 and H9. This conclusion is in line with the empirical results of a study by Xu et al. (2022), which found that the relationship between CSR and ecological performance is positively and significantly mediated by green technology innovation. 16 N. AlESSA ETAl. 7. Summary and conclusion We examined the extent to which firms in Ghana disclose information regarding sustainability. Specifically, we investigated the influence of stakeholders’ pressure on sustainability disclosure, with green technological innovation serving as a mediator. 383 out of 421 identified respondents from various mining and manufacturing firms in Ghana submitted valid responses to the survey questionnaire. The results of the article demonstrated that stakeholder pressure (shareholder pressure, government pressure, and consumer pressure) a have a significant influence on firms’ ESG disclosure. Moreover, the results demonstrate that a firm’s GTI mediates the connection between stakeholder pressure in terms of shareholder pressure and consumer pressure. Nonetheless, the study revealed that GTI played a negligible mediating role between government and ESG disclosure. It is therefore recommended that product development managers implement new technologies and techniques, as well as to consider eco-friendly initiatives. Incorporating GTI into the product design and manufacturing process enables firms to not only fulfill their client’s needs but also reduce their environmental impacts, like the production of carbon dioxide and solid debris. Also, to enhance firms’ reputations, businesses should take the necessary steps, such as using eco-friendly flora, preparing annual integrated reports, and disclosing sustainability information, to resolve society and other parties’ issues. The study made the following contributions: First, by including green technology innovation as a mediating variable, the study advances our knowledge of the mechanisms influencing ESG disclosure through stakeholder pressure. Secondly, this study adds a contextual dimension to institutional theory by looking at Ghana. It recognizes that emerging markets’ regulatory and normative environments may differ significantly from developed economies. This helps us understand how institutional factors interact with stakeholder pressures to shape ESG disclosure practices in a diverse global setting. Thirdly, the study provides a holistic view by looking at process and product innovation as parts of green technology innovation. This recognition acknowledge that environmentally friendly practices cover more than just the finished product; they also include the production processes. This broad view helps us understand the eco-friendly efforts in businesses more complexly. 7.1. Policy implication The study’s results have numerous implications for decision-makers, executives at businesses, regulatory agencies, and other stakeholders. First, through stakeholder pressure and GTI initiatives, the study offers a vital understanding of the steps that must be taken to improve sustainability disclosure. Since ecological issues are of greater worry for ecological pressure organizations, the community, as well as authorities for regulation as a whole, the study recommends that businesses evaluate the demands or interests of stakeholders when making business decisions. The prioritization of stakeholder demands and interests by businesses not only facilitates their attainment of a common competitive advantage and compliance but also facilitates their achievement of improved sustainability disclosure performance. Moreover, regarding strategic decision-making, Ghanaian businesses may use the study results to guide strategic decision-making processes, recognizing the influence of stakeholder pressure on ESG disclosure practices. Policymakers may utilize the results to develop ESG transparency interventions for various firms. The inclusion of stakeholder expectations into strategic decision-making processes has the potential to improve stakeholder interactions, hence contributing to a firm commitment to climate protection. 7.2. Limitation and future research This research has its drawbacks. First, data were gathered from managing directors of selected mining and manufacturing firms in Ghana, with no other countries or regions considered. Therefore, the research cannot be generalized regionally. Hence, future research should consider multiple nations. Secondly, the pressure exerted by stakeholders is measured using only three dimensions (shareholder, government, and customer pressures). Other forms of stakeholders’ pressure such as employee and creditor pressure were not considered. Future research should consider adding other forms of stakeholder pressure that possibly influence sustainability disclosure. COGENT BUSINESS & MANAGEMENT 17 Third, given that the study did not include any moderating variables, it limits the ability to investigate the potential nuanced effects and interactions. Several factors, including organizational culture, regulatory environment, and industry characteristics, have the potential to impact the link between stakeholder pressure and ESG disclosure which were not considered in this study. Hence, future studies should consider these variables. Fourth, there were no control variables in the study, which means there is a possibility of bias caused by missing factors. There may be factors that need to be considered that influence both stakeholder pressure and ESG disclosure, which confounds the link that has been seen. It is recommended that future studies consider including relevant control factors to make the results more reliable. Author contributions Noha Alessa: conceptualization & design; methodology; analysis & interpretation; drafting of the paper; revising it critically for intellectual content. John Yaw Akparep: conceptualization & design; methodology; analysis & interpretation; drafting of the paper; and revising it critically for intellectual content. Inusah Sulemana: conceptualization & design; analysis & interpretation; methodology; drafting of the paper; and revising it critically for intellectual content. Andrew Osei Agyemang: conceptualization & design; methodology; analysis & interpretation; drafting of the paper and revising it critically for intellectual content. All authors agree to be accountable for all aspects of the work. Disclosure statement No potential conflict of interest was reported by the author(s). Data availability statement The study relied on primary data that were collected through the administration of questionnaire from management of manufacturing businesses in Ghana. 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Antecedents 1 = strongly disagree; 2 = Disagree; 3 = Neutral; 4 = Agree; 5 = Strongly Agree Code shareholder pressure 1 2 3 4 5 sP1 shareholder pressure significantly influences our firm’s commitment to sustainability reporting sP2 our sustainability disclosure aligns with the priorities and concerns expressed by our shareholders. sP3 shareholder pressure is a primary driver for our firm to enhance its sustainability reporting practices. sP4 sustainability disclosure practices are modified in response to the expectations and demands of our shareholders. Code Government pressure gP1 government pressure plays a significant role in motivating our firm to disclose its sustainability initiatives. gP2 our firm actively responds to government mandates and regulations by enhancing sustainability disclosure. gP3 the influence of government pressure is evident in the comprehensive nature of our sustainability disclosure practices. Code Customer pressure CP1 Customer expectations have a substantial impact on our firm’s commitment to sustainability disclosure. CP2 our sustainability disclosures align with the values and priorities of our customer base. CP3 Customer pressure significantly influences the transparency and depth of our sustainability disclosure practices. CP4 Feedback from customers regarding sustainability practices leads to continuous improvement in our disclosure strategies. Code Green technological innovation gti1 the integration of green technological innovation is crucial in satisfying shareholder expectations and promoting transparency in sustainability disclosure. gti2 green technological innovation is a key enabler in responding to government pressure for enhanced sustainability disclosure in our firm. gti3 the adoption of green technological innovation is instrumental in meeting and exceeding customer expectations regarding sustainability disclosure. Code Sustainability disclosure sD1 our firm is committed to maintaining a high level of transparency in sustainability disclosure due to stakeholder expectations. sD2 our firm actively seeks ways to enhance sustainability disclosure in response to changing expectations and pressures from stakeholders. sD3 the influence of stakeholder pressure has a measurable impact on the quality and quantity of sustainability information disclosed by our firm. sD4 stakeholder pressure significantly influences the strategic decisions made regarding sustainability disclosure in our firm.