The mediating role of shareholders score in fostering environmental innovation through integrated reporting: insight from Japan

Purpose This study aims to investigate the relationship between integrated reporting, environmental innovation and the mediating effect of shareholder scores within the context of Japan. Design/methodology/approach SEM on panel data are used to study the impact of the role of shareholder scores in mediating the effect of integrated reporting on environmental innovation. This empirical study was based on a sample of 420 companies operating in Japan for the period spanning 2010 and 2022. Findings Drawing upon empirical results, this research uncovers the pivotal role of the shareholder's score as a mediating factor in this relationship. A higher shareholder score signifies a governance structure that values shareholder input and fairness in treatment. Empowered shareholders leverage their influence to advocate for transparent reporting practices that encompass environmental considerations. Consequently, firms with elevated shareholder scores are more inclined toward environmental innovation, aligning their strategies with sustainability imperatives. Originality/value The findings contribute to understanding of how corporate governance mechanisms, particularly shareholder empowerment, interact with reporting practices to drive environmental initiatives, providing valuable implications for sustainable business practices globally.