Abstract
This study investigates how ESG engagement transforms corporate environmental performance beyond mere disclosure and compliance. Drawing on practice theory, we develop and empirically examine the conceptual model positing that environmental sustainability transformation occurs when a Credible and Responsible Organisational Process (CROP) is aligned. Environmental sustainability transformation is measured by changes in firms’ environmental performance over time (ΔE). CROP defines how responsible corporate organising foundations (social and governance components of ESG) and green innovation jointly shape and enable environmental transformation trajectories. Using a combined dataset of Bloomberg ESG data and CSMAR green innovation data for Chinese listed firms (2015–2024), we test a panel regression model with a fixed-effects specification to account for unobserved heterogeneity across entities. This study contributes to the sustainable and responsible business literature by offering a practice-theoretic explanation of ESG effectiveness and empirical insights into organisational sustainability transformation in an emerging-economy context.