The contentious relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) has been extensively and yet inconclusively debated in the sustainability literature. We further investigate the link between CSR and CFP by examining the mediating role of green innovation performance (GIP). We perform pooled ordinary least squares (OLS) analysis on a panel data of UK firms from 2006 to 2017 provided by the ASSET4 database. We find that CSR is positively and significantly associated with CFP and that GIP plays a significant and positive mediating role in this relationship. Our findings contribute to the extant sustainability literature by using a comprehensive measure of CFP and addressing the mediating effects of GIP on the link between CSR and CFP. The results provide policy, practice, and research implications as investors demand more robust CSR information, regulators establish environmental and climate change rules, and companies focus on the efficiency and effectiveness of their green innovation practices and performance.

This study aims to contribute to the ongoing and inconclusive debates regarding the relative significance of environmental, social, and governance (ESG) sustainability key performance indicators and their correlation with overall sustainability performance. We present a unique two‐step analytical framework to leverage Thomson Reuters' ESG Score (ASSET4) database to determine the most impactful ESG pillars and their subcomponents at both the firm and industry levels. This framework integrates the Method based on the Removal Effects of Criteria (MEREC) with K‐means cluster analysis. Through the MEREC‐K‐means framework, we determine the two most noteworthy ESG pillars within various industries, subsequently clustering them to form peer groups for comprehensive comparative analysis. We find that while the social and economic pillars are the two fundamental pillars of ESG performance in all industries in general, this prioritization sometimes differs from industry to industry. This research makes theoretical and practical contributions by introducing a novel dimensionality reduction technique in ESG pillars, offering valuable insights for strategic resource allocation in corporate social responsibility (CSR) and sustainability initiatives. The implications of our findings extend broadly to investors, policymakers, and practitioners, empowering them to make more informed decisions.