Role of Ethical Leadership in Promoting Sustainable Business Practices.

Abstract

Ethical leadership is rapidly evolving and the concept of sustainable business practice transcending from mere financial metrics to a deep commitment of environmental, social and governance matters. It is gaining much research attention to creating social value, influencing organizational behavior, employee engagement/commitment, and environmental sustainability. Contemporary organizations face the challenge of maintaining profitability while embedding ethical principles into their core operations. On one hand, balancing economic, social, and environmental dimensions is crucial, yet on the other hand, implementation of consistent ethical leadership across diverse global contexts remains difficult. This often leads to unethical behavior and stakeholder distrust, resulting in legal and financial repercussions. This article aims to evaluate the role of ethical leadership in promoting sustainable business practices based on social learning theory, stakeholders’ theory, and transformational leadership theory. A review of selected papers was employed from 2020 to 2024 to evaluate the role of ethical leadership and sustainability business initiatives. The findings showed pertinent characteristics of ethical leadership in support to sustainable business practices. Further, employee involvement in sustainability initiatives was very important. In conclusion, ethical leadership is a significant part of modern organization in developing sustainable business practices. Hence, this article contributes to knowledge from enhanced resilience of organizations through reputation to compliance according to set regulatory standards.