Effect of Corporate Governance on Environmental Performance: Empirical Evidence from Zimbabwe

Abstract

The increasing pressure on environmental responsibility from shareholders, government regulators and the public led to the need for companies to pay more attention to the environmental impact of their operations. This study has been carried out to investigate the effect of corporate governance on environmental performance in Zimbabwe. Board size, board independence, gender diversity, managerial ownership and institutional ownership were used to proxy corporate governance while Global Initiative Reporting Index (GRI) was used to proxy environmental performance and firm age was introduced as a control variable. Exposit research design was adopted, data were collected from the annual reports of listed 27 manufacturing companies on the Zimbabwe Stock Exchange using census sampling techniques and panel regression analysis was used to analyze the data collected. The findings showed that board size, gender diversity and managerial ownership have a positive and significant effect on environmental performance while board independence and institutional ownership have positive and insignificant effects on environmental performance. It was concluded that corporate governance variables are important considerations in achieving a good environmental performance and recommended that good number of board size and women should be encouraged for objective and gender-balanced decision making as regards environmental issues.