Board demographic, structural, and capital diversity, and corporate carbon performance: international evidence

Abstract

PurposeWe examine the relationship between board demographic diversity, board structural diversity, board capital diversity and corporate carbon performance (CCP). Additionally, we investigate how corporate sustainable resource use mediates these relationships.Design/methodology/approachWe utilize unbalanced panel data from Refinitiv Eikon covering 9,960 global firms from 2002 to 2022. We conduct a panel regression analysis to examine the relationship between board demographic diversity, board structural diversity, board capital diversity and CCP. In addition, we estimate entropy balancing estimation and two-step system GMM to address endogeneity issues.FindingsThe results indicate that board demographic diversity (including tenure, gender, and cultural diversity), structural diversity (such as board independence, board size, CEO-chairman duality, board meetings, and board compensation), and capital diversity (comprising board member affiliation and specific skills) all have a positive and significant association with corporate carbon performance. Additionally, our findings reveal that corporate sustainable resource use fully mediates the relationship between board demographic diversity and CCP and partially mediates the relationship between board structural diversity, board capital diversity, and CCP.Practical implicationsOur study findings are based on a diverse range of global firms, ensuring that the results address the global challenges of firm-level climate change response and governance issues.Originality/valueOur group diversity constructs offer new insights into the literature and further advance research on board group diversity. Additionally, for the first time, we explore the mediating role of sustainable resource use through the resource-based view (RBV) between-group diversity attributes and corporate carbon performance.