ESG score, board structure and the impact of the non-financial reporting directive on European firms

Marco Bigelli, Stefano Mengoli and Sandro Sandri

Journal of Economics and Business, 2023, vol. 127, issue C, No S0148619523000267

Abstract: The primary objective of this research is to examine the impact of the EU Non-Financial Reporting Directive on the significance of specific board characteristics in promoting higher ESG scores among 835 European companies listed from 2002 to 2020. Empirical results indicate that gender diversity, cultural diversity, a higher number of independent directors on the board, and the presence of a CSR committee all significantly contribute to achieving higher ESG scores. Furthermore, the Non-Financial Reporting Directive 95/2014, which requires large EU firms to report on various environmental, social, and governance issues, not only drives EU firms to attain higher ESG scores but also significantly reduces the ESG gap between companies with and without a CSR committee. Meanwhile, other board characteristics have maintained their relevance to a substantial extent.

Keywords: ESG score; Board characteristics; Gender diversity; Cultural diversity; EU 95/2014 directive (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:127:y:2023:i:c:s0148619523000267

DOI: 10.1016/j.jeconbus.2023.106133

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