GREEN ACCOUNTING MECHANISMS AND ORGANIZATIONAL SUSTAINABILITY: THE MEDIATING ROLES OF ENVIRONMENTAL REPORTING AND STAKEHOLDER TRUST

Abstract

Background: Growing environmental concerns and regulatory demands have compelled organizations to adopt sustainable practices that balance economic growth with ecological responsibility. In this context, green accounting has emerged as a crucial tool for integrating environmental performance into financial decision-making. However, the mechanisms through which green accounting contributes to organizational sustainability remain insufficiently explored, particularly in developing economies where institutional support and stakeholder engagement are still evolving.

Aim: This study aims to examine the impact of green accounting mechanisms on organizational sustainability, with a specific focus on the mediating roles of environmental reporting and stakeholder trust. grounded in stakeholder theory, the research seeks to explain how transparency and trust transform green accounting practices into sustainable outcomes.

Methodology: A quantitative, cross-sectional research design was employed, with data collected from 457 managers and executives in the Pakistani manufacturing sector. Established measurement scales were adapted and assessed through SmartPLS for structural equation modeling, while SPSS was used for descriptive and reliability analyses.

Findings: The results revealed that green accounting mechanisms significantly enhance organizational sustainability. Moreover, both environmental reporting and stakeholder trust play partial mediating roles, indicating that transparent environmental disclosures and trust-based stakeholder relationships amplify the positive impact of accounting practices on sustainability outcomes. The study provides empirical evidence that green accounting, when supported by transparency and trust, can drive sustainable growth and reinforce corporate legitimacy.

Keywords: Green Accounting Mechanisms, Organizational Sustainability, Environmental Reporting and Stakeholder Trust