The Effect of the Characteristics and Activities of the Board of Directors on Sustainable Development Goal (SDG) Disclosures: Empirical Evidence from Southeast Asia

Abstract

This study aimed to analyze the board of directors’ commitment to the Sustainable Development Goals (SDGs) by looking at the influence of the characteristics and activities of the board of directors and the existence of Corporate Social Responsibility (CSR) committees on disclosures regarding the SDGs. The directors’ characteristics that were analyzed in this research included the board size, the proportion of independent directors, the presence of female directors, and the presence of foreign directors. The activities analyzed included the number of board meetings held in one year and the percentage of directors in meetings. The context of this study was companies in five Southeast Asian countries—Indonesia, Malaysia, Singapore, Thailand, and the Philippines—during the 2016 and 2017 reporting years. This study was an initial research work aiming to empirically examine the effect of the board of directors on SDG disclosures in public companies from five countries in Southeast Asia. The study shows that the percentage of attendance of board directors’ meetings and the existence of CSR committees positively affected SDG disclosures. It also indicates that the presence of the board at the meeting can encourage more intensive SDG disclosures. Companies with a high commitment to sustainability, as shown by their forming of CSR committees, also tended to have a higher level of SDG disclosures.

Sustainability (Is Not) in the Boardroom: Evidence and Implications of Attentional Voids

“…Many studies suggest that the size of the board matters when it comes to corporate responsibility, arguing that larger boards offer more diverse perspectives that should strengthen their monitoring roles and lead to better CSR performance [21,23,33,34]. Results, however, have been mixed; while some studies have found no relationship between board size and CSP [21] or disclosures [35], others have found a positive association [10,33]. Paradoxically, it appears that larger boards are also more positively associated with negative CEP outcomes, such as environmental litigation [36] and environmental concerns [14].…”

“…Foreign boards have also been shown to engage in more CSR activities [41]. Lastly, the presence of different board committees, such as a CSR or an environmental or sustainability committee, have also been associated with a greater stakeholder orientation towards corporate governance [42], a greater commitment to SDG disclosures [35], and better social or environmental performance [37,43]; however, this support, too, has not been universal [44].…”

“…Second, a large body of literature has also emerged around the composition of the board of directors in relation to a firm's ESG practices. In general, although not always [35,45], female directors tend to have a more positive influence on a firm's social and/or environmental policies, practices, and performance overall [10,23,28,34,39,40,[46][47][48][49][50]. For example, Jizi [10] found that female participation on boards is not only positively related to CSR engagement and reporting, but also to implementing specific social and environmental policies, such as energy efficiency, green building, and climate change policies.…”

Economic Crisis and Corporate Governance: How Can Board Independence and Expertise Maximize the Firm Value?

“…On the other hand, expertise is an alternative proxy to measure boards' ability to provide their services (Cunningham, 2008;Wagner, 2011). Expertise is inherently multi-dimensional and ranges from knowledge of the industry (Dass et al, 2014) to firm specific information and other director-craft competences such as political connections, financial literacy or sustainable development goals (Ali et al, 2022;Ammari, 2022;Gilani et al, 2021;Naheed et al, 2021;Crifo et al, 2018;Sekarlangit & Wardhani, 2021;Burak Guner et al, 2008;Mire, 2016). Directors develop their expertise through their education, their professional experience and their business activity with the firm (Anderson et al, 2011;Reeb & Zhao, 2013).…”

“…Expertise refers to the set of knowledge and competencies related to directors' duties, that is financial and extra-financial (sustainable development) information (see e.g. Dass et al, 2014;Sekarlangit & Wardhani, 2021). Independence captures the "distance" or connection between board members and the CEO, a higher independence meaning a lower propensity of collusion between the board and the CEO (see e.g.…”