Impact of Environmental, Social, and Governance Risks and Mitigation Strategies of Innovation and Sustainable Practices of Host Country on Project Performance of CPEC

This research examines the relationship between environmental, social safety and governance risks, and the mitigation strategies of the host country to enhance project performance in the China–Pakistan Economic Corridor (CPEC). The study concludes that the timely and effective completion of CPEC projects is challenged by environmental, social safety, and governance (ESG) risks, including environmental degradation, security threats, and governance issues. Based on the data of 618 respondents from Pakistan and using Structural Equation Modeling (SEM) through SMART PLS 4, the study investigates the impact of sustainable environmental practices, safety and security measures, governance risk mitigation actions, and project management systems on the project performance of CPEC projects. The results show that mitigation efforts implemented by the host country reduce the ESG investment risk and yield a positive effect on the project performance. Hence, this paper will show the importance of proactive measures such as sustainable development practices, security risk management systems, and transparent governance practices in matching challenges and enhancing project benefits. This research reinforces the potential for these risks to be mitigated through the adoption of innovative technologies. Innovation in environments, social protection, and governance frameworks can greatly mitigate the negative impacts of risks, directly improving the outcomes of project delivery. Infrastructure projects are extremely challenging to manage, and this study gives key hints for enhancing project safety and risk management in those types of infrastructure projects for practitioners, policymakers, project managers, and other stakeholders to establish innovative, sustainable strategies.