In today’s business landscape, sustainable practices have gained immense importance, and organizations are increasingly recognizing the value of integrating sustainability into their operations. Sustainable performance refers to a company’s ability to achieve long-term success while minimizing negative environmental and social impacts. It is accomplished through implementing sustainable business practices that prioritize adding value for stakeholders while simultaneously addressing environmental, social, and governance (ESG) risks and opportunities. Organizations all over the world are under tremendous pressure to develop effective corporate governance processes as a result of the increasing incidence of company failures. Effective corporate governance ensures that companies take into account the interests of all stakeholders, including the environment and society, in their decision-making [1]. This is closely tied to corporate social responsibility, which requires companies to operate sustainably and ethically. Green finance provides companies with the means to invest in sustainable projects that benefit both the environment and their long-term financial performance. Corporate governance has emerged as a critical area of focus globally due to its relevance in defining the concept of privatization and its association with several global failures ^[2][3][2,3]. However, to understand the impact of corporate governance and green finance initiatives on sustainable performance, it is crucial to examine the moderating role of top management employees’ concerns.

The SME sector is crucial to China’s economy, contributing nearly 60% to the country’s total GDP and accounting for 68% of the country’s total exports [4]. Moreover, SMEs create a significant proportion of job opportunities in China, generating around 75% of all employment in the country. Although SMEs are a critical contributor to the country’s economy, they are facing increasing pressure from the government and other stakeholders to prioritize sustainability and improve their overall performance. As a result, firms have become increasingly focused on corporate social responsibility in recent years and have started adopting sustainable practices to minimize their environmental impact and enhance their social responsibility [5]. The concept of corporate social responsibility involves integrating social and environmental considerations into a company’s operational strategies and relationships with stakeholders. Businesses can better connect their operations with sustainable goals by implementing CSR practices, which will have a positive impact on the environment. According to Zhang et al. (2019), adopting CSR practices can also benefit SMEs by enhancing stakeholder engagement, reputation, and overall sustainable performance [6]. SMEs also encounter a significant challenge in accessing finance, which can be tackled through the adoption of sustainable practices. The concept of green finance aims to promote the financing of projects that support environmentally-friendly initiatives and contribute to sustainable development. This approach can be particularly beneficial for SMEs, as it can serve as a crucial tool in reducing their environmental impact and enhancing their overall sustainable performance, as highlighted by [7]. Effective corporate governance is another crucial factor in improving a firm’s sustainability. It ensures that companies are managed transparently and ethically while remaining accountable to all stakeholders. This fosters trust between SMEs and their customers, employees, and investors and strengthens their long-term relationships with suppliers and other business partners. By implementing effective corporate governance practices, SMEs can manage risks associated with sustainability issues, avoid legal and financial penalties, and sustain their long-term growth and success. Hence, SMEs must integrate sustainability into their business practices at all levels, from strategic planning to daily operations, to ensure that their practices align with their sustainability goals [8]. Additionally, they should prioritize establishing strong relationships with stakeholders and investors through a sustainability lens to boost their reputation and financial performance. As corporate social responsibility becomes more important, there is a growing demand for transparency and information sharing on companies’ sustainability performance.

Corporate governance and green finance are two crucial factors that can significantly impact the sustainable performance of SMEs in China. Several studies have explored the relationship between these two factors and their impact on sustainable performance. According to [9], corporate governance and green finance initiatives are two essential factors that contribute to the sustainable development of organizations. Meanwhile, Zaman et al. (2022) investigated the link between green finance and CSR in the non-banking sector [10]; however, the positive impact of green finance on corporate image was demonstrated by [11]. Another scholar Mavroulidis et al. (2022) focused on the development of green finance [12]. Furthermore, Rehman et al. (2021), stressed the importance of implementing sustainable practices to promote sustainable development, while highlighting the lack of research related to sustainability in SMEs in China [13]. Similarly Aslam and Jawaid (2022), also highlighted the need to integrate green banking initiatives into routine operations [14]. Furthermore, Chen et al. (2022) emphasized the critical role of green banking in promoting social and economic development in developing economies [15]. All these studies were conducted in different sectors and explore the impact of corporate governance and green finance on sustainable performance. Similarly, Ullah et al. (2022) found that corporate environmental responsibility moderates the relationship between green finance and the sustainable performance of Chinese SMEs [16]. The concept of sustainable development has emerged as a major concern in today’s corporate world. To protect natural resources for future generations, the promotion of sustainable practices has become a top focus for many organizations. However, there is a dearth of studies on sustainability in China’s SMEs, especially those in Shanghai. Considering the enormous contribution SMEs make to the Chinese economy, this is a huge study need. Investigating the effects of governmental policies and regulations on sustainability outcomes in SMEs might help bridge this gap. The literature indicates that government regulations in China were crucial in encouraging green business practices among Chinese small- and medium-sized enterprises (SMEs) [17]. Therefore, it is crucial to evaluate the impact of government policies and regulations on fostering long-term viability in small- and medium-sized enterprises. More research is needed to explore how different combinations of these variables may lead to different outcomes for SMEs in China.

2. Corporate Governance and Corporate Social Responsibility

Theories of agency and stakeholders offer insight into the reasons why effective corporate governance (CG) facilitates the adoption of corporate social responsibility (CSR) initiatives by companies and how it enhances a firm’s bottom line performance [18]. As per the agency theory perspective, corporate governance (CG) functions as an organizational tool that defines the roles, duties, and rights of stakeholders, including shareholders, and guarantees that business decisions are aligned with the objectives of the firm [19]. Recent years have seen a rise in the study and practice of corporate social responsibility (CSR), which is closely tied to corporate governance. Transparency, accountability, and ethical behavior are essential components of corporate social responsibility (CSR) and are fostered by effective governance structures. For businesses to achieve sustainable economic growth, both variables must be taken into account while making decisions. Several studies highlight the connection between corporate governance and CSR. Moreover, corporate governance (CG) effectively strikes a balance between creating short-term value and maintaining long-term value by monitoring the nature and extent of engagement in CSR initiatives [10]. According to the stakeholder theory, the adoption of corporate social responsibility (CSR) practices by companies generates value (such as heightened productivity) for their internal stakeholders, while simultaneously safeguarding value (such as a favorable reputation) with their external stakeholders [9]. Similarly, Dai et al. (2022) also suggest that a company’s commitment to CSR may require it to prioritize the expectations of various stakeholders over the short-term benefits of its shareholders [20]. Smith, Zhang, and Wang (2022) evaluated that stakeholder-centered CG have significant impact on CSR in large Shanghai Stock Exchange-listed manufacturing businesses. [21]. Xu and Hou (2021) discovered that overseas CEOs exercise CSR more. CEO abroad studies experience affects CSR more than overseas job experience in Chinese manufacturing listed companies. Recent research by Jain, Tanusree, and Dima Jamali (2016) suggests that “corporate governance practices have a positive impact on CSR activities and outcomes, and the relationship is moderated by the level of institutional development in a country [22].” Businesses in nations with more advanced institutional systems, including the United States and Japan, were found to have better governance and more CSR initiatives. The relationship between board diversity and CSR performance was also investigated. Better CSR performance was shown in the areas of environmental sustainability and labor rights at firms with more diverse boards, according to the report.

3. Mediating Role of Corporate Social Responsibility between Green Finance and Sustainability

Corporate social responsibility (CSR) has a significant focus and encompasses a diverse range of fundamentals for achieving sustainability. CSR involves considering various perspectives, such as economic, legal, ethical, and future-oriented views, that society holds about businesses over an extended period [23]. Green and environmentally friendly businesses will receive credit-preferred treatment and support from commercial banks, which will have a direct impact on such businesses’ access to capital and their financing costs [24]. CSR and green credit initiatives can influence a company’s bottom line in multiple ways, such as reputation shifts, fluctuations in market share, and changes in environmental and credit risk. Although CSR could potentially play a mediating role in the relationship between green banking initiatives and sustainable performance, there has been limited research conducted on the direct association between CSR, green credit, and firm performance. Some studies such as those of Shahzad et al. (2022) and Prasad et al. (2019) demonstrate that CSR considerably improves environmental performance by encouraging eco-friendly projects within the corporation ^[25][26][25,26]. Suganthi (2020) also suggested that CSR can significantly improve a company’s environmental, social, and economic performance [27]. Additionally, several studies, including Lee (2020) and Madaleno et al. (2022), have demonstrated that green finance can enhance the long-term sustainability of businesses by promoting the development of eco-friendly initiatives, which can, in turn, improve the financial well-being of financial institutions ^[28][29][28,29]. On the other hand, a small number of studies have also investigated the influence of green finance on CSR ^[30][31][30,31]. Meanwhile, Indriastuti and Chariri (2021) suggested that green investment and CSR could be integrated if their goals were aligned [32]. Similarly, Hao and He (2022) proposed that green financing could enhance borrowers’ social responsibility, leading to improved profitability [33]. Green finance is especially linked to the government, depositors, borrowers, and other stakeholders interested in environmental conservation. This interrelation between green finance and CSR could potentially alter the relationship between CSR and sustainable performance.

4. Green Finance and Corporate Social Responsibility

The term “Green Finance”, also known as sustainable finance or environmental financing, pertains to the practice of banks providing funding for sustainable business projects and utilizing credit to promote sustainable development [21]. In the modern era, stakeholders not only expect companies to pursue their primary objective of generating profits but also demand sustainable practices. CSR and green banking are aligned in their objectives and fundamental principles. Broadly speaking, a company’s dedication to environmental accountability is typically demonstrated through its compliance with green credit obligations. However, economic and ethical responsibility, among other aspects of corporate social responsibility, also hold significant value. In regard to environmental responsibility, businesses diverge from conventional banks by emphasizing disclosing environmental information. Green financing is a useful instrument for advancing sustainable development and tackling environmental issues [18]. They contend that incorporating green financing into corporate social responsibility plans may assist businesses in achieving their sustainability objectives while also bolstering their public standing. In a similar vein, Zhang et al. (2019) argue that corporate social responsibility may be advanced via green financing [19]. Scholars argue that businesses may help promote sustainable development by incorporating green financing into their CSR strategy [18]. They discovered that businesses that make investments in green finance are more likely to participate in CSR initiatives, which may boost their brand and financial performance. Furthermore, they propose that green money may be utilized as a tool for supporting sustainable development and tackling social and environmental concerns [20]. They argue that sustainable development may benefit from corporations’ CSR efforts when green money is a part of such efforts.

5. Corporate Social Responsibility Mediates the Relationship between Corporate Governance and Sustainable Performance

Prior research has shown that corporate governance (CG) is a crucial factor in the development and prosperity of companies, as it fosters the adoption of corporate social responsibility (CSR) initiatives that can endure over time [34]. The practice of corporate social responsibility (CSR) involves incorporating environmental and social considerations into a company’s strategies and practices to enhance its responsibility, transparency, and sustainability over the long term ^[35][36][35,36]. The objectives of the firm encompass both financial outcomes, such as financial performance (FP), and non-financial outcomes, such as socially and environmentally responsible performance (SNFO) or corporate social responsibility (CSR) performance. CSR can function as an expansion tool to address the interests of other stakeholders, in order to attain the primary goal of optimizing financial performance, as suggested by [37]. The relevance of good corporate governance in encouraging CSR actions and results has been further emphasized in recent research. Strong governance frameworks and board diversity significantly affect the acceptance and execution of CSR efforts in technology enterprises [10]. Moreover, the researchers found that companies with effective governance structures and independent boards are more likely to participate in socially responsible activities [38]. These results underline the significance of good corporate governance in motivating CSR and, in the end, boosting organizational efficiency. In addition, CSR practices may aid businesses in gaining trust, reputation, and goodwill among stakeholders, all of which can improve a company’s long-term financial performance.

6. Moderating Role of Top Management Commitment

Wijethilake and Lama (2019) argues that top management plays an especially critical role in driving an organization’s green initiatives [39]. According to Tandoh et al. (2022), the achievement of an organization’s objectives is contingent on the dedication of its top-level management [40]. Hence, the cultivation of sustainable practices, which can result in a competitive edge, is predicated on the managers’ commitment to promoting such initiatives. This is because they are responsible for allocating resources and making decisions that are necessary to facilitate the necessary changes within the organization. However, Greiner and Sun (2021) propose that organizations are more likely to adopt environmentally friendly practices when there is a high level of commitment from top management [41]. This is consistent with the idea that top management plays a critical role in driving sustainability initiatives within organizations. When top management exhibits a strong commitment, it leads to a heightened sense of accountability and encourages them to take more proactive measures [42]. Top-level management serves as both leaders and catalysts for change, thereby ensuring the availability of necessary resources to embrace new business ideologies [43]. Furthermore, Mandip (2012) suggests that the moderating ability of top management positions them as significant influencers in encouraging other business units to adopt green policies and practices [44]. Top management commitment is crucial for achieving an organization’s mission and improving its performance. This implies that the success of any organizational goal is reliant on the dedication and involvement of top management. According to Babiak and S. Trendafilova (2011), top management commitment provides a framework for achieving environmental improvements effectively [7]. The dedication of senior management in a company towards implementing environmentally sustainable practices can significantly help in promoting the implementation of green banking practices in a bank’s branches. Other scholars, Wijethilake and Lama (2019), found evidence to support the idea that a strong commitment from top management has a positive impact on the adoption of environmental management systems [39]. This suggests that top management plays a crucial role in promoting and implementing sustainability practices within organizations. In addition, Yusliza et al. (2019) conducted a study that revealed a substantial and favorable correlation between corporate social responsibility, top management commitment, and corporate sustainability [43]. Similarly, Chatterjee et al. (2023) contend that the participation and dedication of top-level executives in corporate social responsibility initiatives are crucial to their successful implementation [42]. The authors further argued that a lack of commitment from the organization’s leadership is a key hindrance to the effective execution of CSR practices, as the CEOs’ political beliefs can impact their firms’ approach to CSR.