Sustainability Capability and Stakeholder Engagement: Evidence From Indian Listed Firms

ABSTRACT

This study examines whether reported manifestations of sustainability capability among Indian listed firms are associated with development‐oriented stakeholder engagement. The sustainability capability index (SCI) captures five observable elements covering targets, resource‐management practices and governance arrangements, while the development‐oriented engagement index (DEEI) records engagement signals rather than verified development impact. Using 2400 firm‐year observations from 400 firms over FY2018‐19 to FY2023‐24, firm and year fixed‐effects estimates show a positive contemporaneous SCI–DEEI association. The proposed sector and resource‐capacity moderators are not significant, and one‐year lagged SCI is weakly negative. Component and leave‐one‐out analyses show that the aggregate association is concentrated mainly in stakeholder engagement. The evidence therefore indicates same‐year alignment between reported sustainability‐capability manifestations and stakeholder‐facing engagement, but does not establish development impact, causal transmission or a stable year‐ahead relationship.