Do Board's Corporate Social Responsibility Strategy and Orientation Influence Environmental Sustainability Disclosure? UK Evidence

Abstract

The environmental implications of corporate economic activities have led to growing demands for firms and their boards to adopt sustainable strategies and to disseminate more useful information about their activities and impacts on environment. This paper investigates the impact of board's corporate social responsibility (CSR) strategy and orientation on the quantity and quality of environmental sustainability disclosure in UK listed firms. We find that effective board CSR strategy and CSR-oriented directors have a positive and significant impact on the quality of environmental sustainability disclosure, but not on the quantity. Our findings also suggest that the existence of a CSR committee and issuance of a stand-alone CSR report are positively and significantly related to environmental sustainability disclosure. When we distinguish between firms with high and low environmental risk, we find that the board CSR/sustainability practices that affect the quantity (quality) of environmental sustainability disclosure appear to be driven more by highly (lowly) environmentally sensitive firms. These results suggest that the board CSR/sustainability practices play an important role in ensuring a firm's legitimacy and accountability towards stakeholders. Our findings shed new light on this under-researched area and could be of interest to companies, policy-makers and other stakeholders.

Corporate governance and sustainable business conduct—Effects of board monitoring effectiveness and stakeholder engagement on corporate sustainability performance and disclosure choices

“…Previous literature also shows that more board expertise on sustainability issues may positively affect the implementation of companies' sustainability strategy and enhance CSP (Shaukat et al, 2016). Moreover, sustainability expertise, for example, in the form of a sustainability committee, may also positively affect SRQ (Cucari, Esposito De Falco, & Orlando, 2018;Hahn & Kühnen, 2013;Helfaya & Moussa, 2017;Liao et al, 2015;Michelon & Parbonetti, 2012). Finally, previous literature supports the notion that board diversity and, in particular, gender diversity are positively associated with CSP and SRQ.…”

“…To capture the effectiveness of board monitoring, consistent with previous literature, we used a composite measure that is based on the following three board attributes: board independence, sustainability expertise, and diversity (e.g., Dhaliwal, Naiker, & Navissi, 2006;Hoitash, Hoitash, & Bedard, 2009;Dilling, 2010;Prado-Lorenzo & García-Sánchez, 2010;De Villiers et al, 2011;Khan, 2010;Frias-Aceituno et al, 2013;Helfaya & Moussa, 2017;García-Meca & Pucheta-Martínez, 2018). Board independence was measured by the ratio of nonexecutive directors to total board size (Hussain et al, 2018;Lim, Matolcsy, & Chow, 2007).…”

Corporate governance and environmental social governance disclosure: A meta‐analytical review

“…This, in turn, would provide beneficial outcomes to companies' stakeholders with the aim of closing the trust gap between companies' information reports and users (Cormier & Magnan, 2015;Helfaya & Moussa, 2017). Policy makers may consider the positive association of CG features as identified in our paper, in order to better achieve an adequate level of nonfinancial reporting of companies.…”

Board gender diversity and environmental performance: An industries perspective

“…The environmental impact and consequences of irresponsibility are greater in resource extractive and manufacturing industries compared with retail and service industries (Bansal & Clelland, ; Hart, ; Helfaya & Moussa, ; Herremans, Herschovis, & Bertels, ). Differences in industries' impacts on the environment can also affect the influence that gender diversity has on the board of directors, as more environmentally impacting resource extractive industry groups have historically been male dominated.…”