Diversified boards and the achievement of environmental, social, and governance goals

Abstract

We explore the impact of board resources arising from diverse board members on the achievement of environmental, social, and governance (ESG) goals. Employing resource dependence theory as our frame and drawing on qualitative data from 41 interviews with board directors of publicly traded and privately held companies in the United Arab Emirates (UAE), we identify three key mechanisms underpinning the achievement of ESG goals, namely, the leveraging of particular connections, the deployment of different resources, and the harnessing of a range of diversity types. We find that the use of social resources is often related to environmental concerns and occasionally social goals, but rarely governance issues. We also find that financial motivations often drive environmental issues, while many of the social resources that added value occurred in the public sector. Importantly, the combining of both skill and social resources, rather than relying on each alone, was seen to increase the likelihood of achieving ESG goals. Our findings also point to the importance of board diversity in accomplishing the board's ESG goals, most especially functional diversity. We propose that such functional diversity, along with resources in the form of social resources and skills, needs to feature more prominently in order to improve ESG performance and outcomes. We highlight the implications of our work, especially regarding the establishment of board diversity policies beyond gender alone.

How can organizations measure the integration of environmental, social, and governance (ESG) criteria? Validation of an instrument using item response theory to capture workers' perception

“…Qualitative assessments, such as interviews and case studies, capture nuanced aspects of ESG criteria (Shaikh, 2021). Alawadi et al (2023) employed qualitative methods to explore the impact of diverse board resources on ESG goal achievement, providing rich contextual insights into organizational practices.…”

“…Qualitative assessments, such as interviews and case studies, capture nuanced aspects of ESG criteria (Shaikh, 2021). Alawadi et al (2023) employed qualitative methods to explore the impact of diverse board resources on ESG goal achievement, providing rich contextual insights into organizational practices. These approaches enable a thorough understanding of stakeholder perceptions, management strategies, and the alignment of practices with societal expectations.…”