Mediating role of human capital in enhancing ESG practices in manufacturing for regional labour market development

Surgut State University, Department of Management and Business, 628412 Surgut, Lenin Str., 1, Russia

^* Corresponding author: k121time@yandex.ru

Abstract

Improvement of human capital opportunities is as a paramount outcome resulting from the implementation of Environmental, Social, and Corporate Governance (ESG) practices. Article aims to examine the pivotal role played by human capital as an intermediary factor explaining the impacts of ESG practices within firms on the regional labour market. Research methodology employs the Partial Least Squares Structural Equation Modelling (PLS SEM) technique. This approach is founded on data collected from a survey of 362 employees affiliated with manufacturing companies situated in the industrially advanced Ural region of Russia. The findings unveiled that ESG practices do not have a significant direct influence on the social and cultural development of the region. Instead, they contribute to the development of human capital, thereby enhancing opportunities on the local labour market. This manifests through the creation of stable employment opportunities, engaging and diverse work environments, and an elevation in career prospects. The implications of these findings extend to the practical realm, offering insights for the formulation and execution of regional human capital management strategies within Russian enterprises. Additionally, these findings can inform the development of ESG practices that wield a positive influence on the local labour market, thereby fostering a more sustainable and prosperous future for the region.