Analysis of the influence of social and economic dimensions on sustainable development through environmental performance as a mediating variable: A structural equation modeling-partial least squares approach

Almira Cindy Khaerunisa

doi:10.61511/jekop.v3i1.2026.3109

Authors

Almira Cindy Khaerunisa Independent Researcher, Indonesia

DOI:

https://doi.org/10.61511/jekop.v3i1.2026.3109

Keywords:

economic dimension, environmental performance, SEM-PLS, social dimension, sustainable development

Abstract

Background: Sustainable development demands a balance between social, economic, and environmental dimensions. This study aims to analyze the influence of social and economic dimensions on sustainable development with environmental performance as a mediating variable using the Structural Equation Modeling-Partial Least Squares (SEM-PLS) approach. Methods: This study uses secondary data from the Indonesian Sustainable Development Indicators (SDGs) report Volume 8 for 2023. The research variables consist of economic, social, environmental, and sustainable development dimensions which are analyzed using SmartPLS 4.0 software to assess validity, reliability, and relationships between constructs. Findings: The results show that economic variables have a significant negative effect on sustainable development (β = −0.930; p = 0.000), while social variables have a positive effect (β = 0.188; p = 0.093). Social variables significantly influence environmental performance (β = 0.516; p = 0.008), whereas economic and environmental variables do not significantly affect sustainability. The model shows strong explanatory power for sustainable development (R² = 0.848) but weak for environmental performance (R² = 0.265). Conclusion: The results show that the economic dimension has a significant negative effect on sustainable development, while the social dimension has a positive but insignificant effect. Environmental performance does not mediate the relationship between social and economic factors on sustainable development. However, the high R² value indicates that the model has strong explanatory power. Sustainable development in Indonesia is still dominated by economic factors, while social and environmental aspects have not provided optimal contributions. Novelty/Originality of this article: This research's novelty lies in the use of Indonesia's 2023 SDGs indicator data using the SEM-PLS approach to test the role of environmental performance as a mediating variable. The results provide a new empirical perspective on the imbalance of sustainable development pillars in developing countries.

References

Barbier, E. B., & Markandya, A. (2013). A new blueprint for a green economy. In A New Blueprint for a Green Economy. Taylor and Francis. https://10.4324/9780203097298

Baydoun, H., & Aga, M. (2021). The effect of energy consumption and economic growth on environmental sustainability in the gcc countries: Does financial development matter? Energies, 14(18). https://10.3390/en14185897

BPS. (2024). Indikator Tujuan Pembangunan Berkelanjutan Indonesia. 8. https://www.bps.go.id/id/publication/2024/12/31/936a26d5d2b168b9971d3b02/indikator-tujuan-pembangunan-berkelanjutan-indonesia-2024.html

Chin, W. W. (1998). The Partial Least Squares Approach to Structural Equation Modeling. Modern Methods for Business Research, (2), 295-336. https://www.researchgate.net/publication/311766005_The_Partial_Least_Squares_Approach_to_Structural_Equation_Modeling

Colantonio, A. (2011). Social Sustainability: Exploring the Linkages Between Research. Policy and Practice In European Research on Sustainable Development, 35–57. https://10.1007/978-3-642-19202-9_5

Dorofeev, M. L. (2022). Interrelations between Income Inequality and Sustainable Economic Growth: Contradictions of Empirical Research and New Results. Economies, 10(2). https://10.3390/economies10020044

Elkington, J. (1998). Partnerships from cannibals with forks: The triple bottom line of 21st-century business. Environmental Quality Management, 8(1), 37–51. https://10.1002/tqem.3310080106

Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error. In Source: Journal of Marketing Research, 18(1). http://dx.doi.org/10.2307/3150980

Garson, D. (2016). PARTIAL LEAST SQUARES (PLS-SEM) 2016 Edition. www.statisticalassociates.com

Gazi, M. A. I., Hossain, M. M., Islam, S., Masud, A. Al, Amin, M. Bin, Senathirajah, A. R. bin S., & Abdullah, M. (2024). CSR and Sustainable Environmental Performance: An Exploration of Mediating and Moderating Factors. Sustainability (Switzerland), 16(19). http://doi.org/10.3390/su16198499

Grossman, G. M., & Krueger, A. B. (1995). Economic Growth and the Environment. The Quarterly Journal of Economics, 110(2), 353–377. http://doi.org/10.2307/2118443

Hair, Joe F., Howard, M. C., & Nitzl, C. (2020). Assessing measurement model quality in PLS-SEM using confirmatory composite analysis. Journal of Business Research, 109, 101–110. http://doi.org/10.1016/j.jbusres.2019.11.069

Hair, Joseph F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. In European Business Review, 31(1), 2–24. http://doi.org/10.1108/EBR-11-2018-0203

Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling in international marketing. Advances in International Marketing, 20, 277–319. http://doi.org/10.1108/S1474-7979(2009)0000020014

Jena, S., Satpathy, N., Sahoo, K. C., & Epari, V. (2022). Access to water, sanitation and hygiene in schools: A prerequisite to achieving SDGs in India. Journal of Preventive Medicine and Hygiene, 63(4), E495–E496. http://doi.org/10.15167/2421-4248/jpmh2022.63.4.2539

Jimenez, A., Jawara, D., LeDeunff, H., Naylor, K. A., & Scharp, C. (2017). Sustainability in practice: Experiences from rural water and sanitation services in West Africa. Sustainability (Switzerland), 9(3). http://doi.org/10.3390/su9030403

Kalfaoglu, S. (2023). Social Sustainability Indicators from Employees’ Perspective: A Qualitative Study on Whether Social Sustainability in Businesses Is Perceived as a Necessity, Preference, or Dream. Sustainability (Switzerland), 15(10). http://doi.org/10.3390/su15107954

Kanbur, R., & Rauniyar, G. (2010). Conceptualizing inclusive development: With applications to rural infrastructure and development assistance. Journal of the Asia Pacific Economy, 15(4), 437–454. http://doi.org/10.1080/13547860.2010.516163

Kenzhegulova, G. (2024). The Impact of Economic Growth on Sustainable Development: an Analysis of ESG Indicators. Eurasian Journal of Economic and Business Studies, 68(4), 18–31. http://doi.org/10.47703/ejebs.v68i4.433

Koirala, B. S., & Pradhan, G. (2020). Determinants of sustainable development: Evidence from 12 Asian countries. Sustainable Development, 28(1), 39–45. http://doi.org/10.1002/sd.1963

Kraus, S., Rehman, S. U., & García, F. J. S. (2020). Corporate social responsibility and environmental performance: The mediating role of environmental strategy and green innovation. Technological Forecasting and Social Change, 160. http://doi.org/10.1016/j.techfore.2020.120262

Manulusi, M. R., Rahmatia, Madris, & Saudi, N. D. S. (2025). Sustainable Development and Environmental Impacts: Insights from Economic Activities in ASEAN-5 Economies. International Journal of Energy Economics and Policy, 15(3), 68–75. http://doi.org/10.32479/ijeep.18624

Misztal, A., & Kowalska, M. (2020). Determinants of sustainable development of industrial enterprises in Poland in the period from 2010 to 2019 – a statistical evaluation. Prace Naukowe Uniwersytetu Ekonomicznego We Wrocławiu, 64(1), 160–173. http://doi.org/10.15611/pn.2020.1.13

Mol, A. P. J., & Spaargaren, G. (2000). Ecological Modernisation Theory in debate: A review. In Environmental Politics, 9(1), 17–49. Frank Cass Publishers. http://doi.org/10.1080/09644010008414511

Pacifico, A. (2023). The Impact of Socioeconomic and Environmental Indicators on Economic Development: An Interdisciplinary Empirical Study. Journal of Risk and Financial Management, 16(5). http://doi.org/10.3390/jrfm16050265

Panayotou, T. (1995). Environmental Degradation at Different Stages of Economic Development. In Beyond Rio, 13–36. http://doi.org/10.1007/978-1-349-24245-0_2

Parikh, P., Diep, L., Hofmann, P., Tomei, J., Campos, L. C., Teh, T. H., Mulugetta, Y., Milligan, B., & Lakhanpaul, M. (2021). Synergies and trade-offs between sanitation and the sustainable development goals. UCL Open Environment, 3. http://doi.org/10.14324/111.444/ucloe.000016

Rockstrom, J., & Noone, K. J. (2009). A safe operating space for humanity. https://www.researchgate.net/publication/44160502

Romer, P. M. (1990). The Problem of Development : A Conference of the Institute For the Study of Free Enterprise Systems. Chicago Press. http://dx.doi.org/10.1086/261725

Sarstedt, M., Ringle, C. M., & Hair, J. F. (2017). Partial Least Squares Structural Equation Modeling. In Handbook of Market Research, 1–40. https://doi.org/10.1007/978-3-319-05542-8_15-1

Sen, A. (1999). Development as Freedom. USA. https://sen.scholars.harvard.edu/publications/development-freedom

Singh, A. K., & Kumar, S. (2022). Exploring the Impact of Sustainable Development on Social-economic, and Science and Technological Development in Selected Countries. Society & Sustainability, 4(1), 55–83. https://doi.org/10.38157/ss.v4i1.405

Singh, A. K., Singh, B. J., & Ashraf, N. (2020). Implications of Intellectual Property Protection, and Science and Technological Development in the Manufacturing Sector in Selected Economies. In Journal of Advocacy, Research and Education, 2020(1). https://www.researchgate.net/publication/344325972_Implications_of_Intellectual_Property_Protection_and_Science_and_Technological_Development_in_the_Manufacturing_Sector_in_Selected_Economies

Terra dos Santos, L. C., Frimaio, A., Giannetti, B. F., Agostinho, F., Liu, G., & Almeida, C. M. V. B. (2023). Integrating Environmental, Social, and Economic Dimensions to Monitor Sustainability in the G20 Countries. Sustainability (Switzerland), 15(8). https://doi.org/10.3390/su15086502

UN DESA. (2023). The Sustainable Development Goals Report Special Edition. https://unstats.un.org/sdgs/report/2023

WCED. (1987). Report of the World Commission on Environment and Development: Our Common Future Towards Sustainable Development 2. Part II. Common Challenges Population and Human Resources 4. https://sustainabledevelopment.un.org/content/documents/5987our-common-future.pdf

Zhao, R., Wang, H. H., Gao, J., Zhang, Y. J., Li, X., Zhou, J. J., Liang, P., Gao, X. W., & Gu, S. H. (2022). Plant volatile compound methyl benzoate is highly effective against Spodoptera frugiperda and safe to non-target organisms as an eco-friendly botanical-insecticide. Ecotoxicology and Environmental Safety, 245. https://doi.org/10.1016/j.ecoenv.2022.114101

Zulfikar, R., Yulianti, F., & Vitria, A. (2023). The Role of Social, Economic, Environmental, Legal and Governance Development on the Quality of Sustainable Development in Indonesia. Business and Social Science (IJEMBIS) Peer-Reviewed-International Journal, 3(2), 243–256. https://doi.org/10.59889/ijembis.v3i2.137