ESG Awareness and Institutional Drivers as Determinants of Sustainable Decision-Making: The Moderating Role of ESG Barriers

Abstract

This study examines the influence of Environmental, Social, and Governance (ESG) awareness and institutional drivers on sustainable decision-making, with a particular focus on the moderating role of ESG barriers. Drawing on a quantitative research design, data were collected from 214 professionals across accounting, management, and sustainability-related roles, with specific relevance to organisations operating in the Gulf Cooperation Council (GCC) region. The data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) to test the proposed relationships. The findings confirm that ESG awareness and institutional drivers significantly influence sustainable decision-making. ESG awareness enhances professionals’ ability to incorporate sustainability considerations into organisational strategies, while institutional drivers such as regulatory frameworks, stakeholder expectations, and market pressures act as key external motivators for ESG adoption. Importantly, the moderating role of ESG barriers is more nuanced than previously articulated. The results reveal that barriers operate across multiple dimensions, including structural constraints (e.g., lack of regulatory clarity and standardisation), cultural factors (e.g., organisational resistance and low sustainability orientation), and capability-based limitations (e.g., insufficient training and expertise). These barriers not only weaken the direct relationships but also vary in their impact across organisational contexts, suggesting differential effects depending on industry characteristics and hierarchical levels within organisations. This more differentiated understanding highlights the complexity of ESG implementation and underscores the need for targeted strategies to address distinct categories of barriers in sustainability practices. In the context of GCC countries, where sustainability agendas are increasingly embedded within national development strategies such as Vision 2030, the findings underscore the importance of strengthening institutional support while addressing structural and organisational barriers. Despite strong regulatory initiatives and growing ESG adoption in the region, limitations in expertise and standardisation continue to hinder effective implementation. This study contributes to the sustainability literature by proposing a parsimonious and integrated framework that combines behavioural (ESG awareness), institutional (drivers), and contextual (barriers) factors to explain sustainable decision-making. The findings offer practical implications for policymakers and organisations in the GCC and similar emerging economies, emphasising the need for capacity-building initiatives, regulatory alignment, and barrier reduction to enhance ESG effectiveness.

Keywords: ESG awareness; Institutional drivers; ESG barriers; Sustainable decision-making; GCC countries; Sustainability