Do board sustainability committees contribute to corporate environmental and social performance? The mediating role of corporate social responsibility strategy

Abstract

The purpose of this study is to investigate the impact of board sustainability committees on environmental and social performance and to examine the mediating effect of corporate social responsibility (CSR) strategy on the relationship between the presence of board sustainability committees and corporate sustainability performance. Using data of U.K. listed firms for the period of 2009–2016, the study employs panel regression analysis and bootstrapping techniques to test study hypotheses. The results suggest that the presence of a sustainability committee improves the effectiveness of CSR strategies. The results also indicate that firms with effective CSR strategies exhibit better environmental and social performance. Further, the empirical results show that the effectiveness of CSR strategy explains the positive relationship between board sustainability committees and corporate environmental and social performance, thus supporting the theoretical framework of the study. The findings of the study shed new light on this research direction and could be of interest to board members, managers, practitioners, investors, policy makers, and regulators that plan to promote sustainability practices and strategies needed for sustainable development.

Board interlocks and greenhouse gas emissions

“…It equals one if a firm has a sustainability committee in a certain year. Theoretically, having sustainability committees affects sustainability reporting (Pucheta‐Martínez, Gallego‐Álvarez, & Bel‐Oms, 2019), integrated reporting (Raimo, Vitolla, Marrone, & Rubino, 2020), and CSR strategy (Orazalin, 2020) but does not affect GHG emissions intensity directly. Our correlation test confirms this.…”

“…Our control variables are those that are commonly used for research regarding either board interlocks, GHG emissions, or environmental performance and include the following: board size (Endo, 2020; Orazalin, 2020; Zou, Xie, Qi, & Yang, 2019), sales growth (Lu & Herremans, 2019), firm size (Orazalin, 2020; Zou, Xie, Qi, & Yang, 2019), return on assets (ROA) (Cordeiro et al, 2020; Orazalin, 2020; Zou, Xie, Qi, & Yang, 2019), free cash flow (García‐Sánchez, Gallego‐Álvarez, & Zafra‐Gómez, 2020; Xue, Zhang, & Li, 2020), leverage (Endo, 2020; Orazalin, 2020; Zou, Xie, Qi, & Yang, 2019), newness of capital equipment (Mahmoudian, Lu, Yu, Nazari, & Herremans, 2020), and capital expenditures (García‐Sánchez et al, 2020; Jordaan et al, 2017). Board Size is the number of members on the board of an individual firm.…”

“…Other studies have documented the role that the board can play in creating value related to financial performance (Dalton, Daily, Ellstrand, & Johnson, 1998), corporate voluntary reporting (Eng & Mak, 2003), and sustainability performance (Hussain, Rigoni, & Orij, 2018). The extent literature also provides strong support for the critical importance of the board of directors in improving environmental performance (Cordeiro et al, 2020; de Villiers, Naiker, & van Staden, 2011; Jain & Jamali, 2016; Orazalin, 2020). We demonstrate this role through a discussion of board interlocks in the next section.…”

Do chief sustainability officers and CSR committees influence CSR-related outcomes? A structured literature review based on empirical-quantitative research findings

“…We are aware of the fact that this position has other titles (e.g., chief ethics officer, chief environmental officer, chief social officer or chief CSR officer), and that their responsibilities may vary in business practice. Moreover, in this analysis, we define CSR committees as corporate subcommittees of boards of directors that make social and/or environmental recommendations to the boards and assist board members in their CSR-related functions (Dixon-Fowler et al 2017;Orazalin 2020). Thus, the implementation of CSR committees in an assistant role for boards (Garcia-Blandon et al 2020) should lead to increased CSR-related board efficiency and CSR expertise.…”

“…We stress only one mediator analysis in our sample, in which CSR strategy mediates the relationship between CSR committees and CSR performance in a UK setting (Orazalin 2020).…”