Sustainability committee and environmental decoupling: International evidence

Abstract

This paper examines whether sustainability committees curb environmental decoupling. Using a global sample, we document a negatively significant association between sustainability committee and environmental decoupling. These results support the notion that sustainability committees lower the gap between firms actual and reported environmental performance. With regard to the composition of such a committee, we show that size and tenure are positively associated with the level of environmental decoupling. However, more independent and gender‐diverse committees lower the level of environmental decoupling. Further analysis shows that documented relationship is not subject to the firms' corporate governance quality or industry nature. We also document that less engagement of firms with sustainability committee in decoupling practices tend to enhance their financial performance. The results are robust to endogeneity concerns, and several robustness tests. Our findings offer important implications for academic researchers, consultants, stakeholders, and policymakers.