SDGs Washing vs Genuine Innovation: The Mediating Role of Sustainability Innovation Authenticity and the Moderating Role of Stakeholder Pressure

Abstract

This study addresses the rising issue that firms may publicly align with the SDGs while lacking authentic sustainability innovation, thereby creating a gap between corporate sustainability claims and substantive organizational practices. Thus, this study examines the twofold consequences of corporate sustainability practices by distinguishing between genuine innovation and SDG washing. It also examines how sustainability innovation authenticity mediates the relationship and stakeholder pressure moderates it, offering critical insight into the effectiveness of corporate sustainability initiatives. A quantitative research design was adopted, in which primary data were gathered from 450 managers and sustainability professionals in the Pakistani textile industry. A purposive sampling technique was used to target firms engaged in sustainability practices. Partial Least Squares Structural Equation Modeling (PLS-SEM) was applied to test the mediation and moderation relationships. Corporate sustainability practice can have two outcomes: a huge improvement in both authentic innovation and SDG washing. The authenticity of sustainability innovation is the most critical mediating factor, as it enables sustainability innovation and reduces SDG washing. Moreover, the relationship between sustainability practices and authenticity is strengthened through stakeholder pressure, which can motivate companies to take more substantive actions regarding sustainability. This study is relevant to the literature because of its critical analysis of companies' sustainability practices, which goes beyond perceived advantages. The study introduces the concept of sustainability innovation authenticity as a key mechanism for differentiating between substantive and symbolic practices, integrating Institutional Theory and Legitimacy Theory. The results would be beneficial for researchers and practitioners who want to build more effective and credible sustainability initiatives