The Heterogeneity of Board-Level Sustainability Committees and Corporate Social Performance

Jenna J. Burke (), Rani Hoitash () and Udi Hoitash ()
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Jenna J. Burke: University of Colorado Denver
Rani Hoitash: Bentley University
Udi Hoitash: Northeastern University

Journal of Business Ethics, 2019, vol. 154, issue 4, No 19, 1186 pages

Abstract: Abstract This paper explores an increasingly prevalent element of board-level commitment to sustainability. We propose a theoretical framework under which the existence and associated actions of board-level sustainability committees are motivated by shared value creation, where the interests of a diverse group of stakeholders are satisfied and sufficient profit is achieved. Using hand-collected data, we find that sustainability committees are heterogeneous in focus and vary in their effectiveness. Specifically, we disaggregate the sustainability committee construct based on stakeholder group focus (i.e., community, employee, environment, and consumer/supplier) and find that associations between sustainability committees and performance outcomes are stronger when committees focused on a specific stakeholder group are paired with relevant performance outcomes. We generally find that sustainability committees are effective at impacting relevant strengths, but do not mitigate relevant concerns. These results are consistent with the shared value framework, where committees both generate value by pursuing sustainability-related opportunities and protect value by monitoring, but not necessarily mitigating sustainability-related risks. Univariate tests suggest that effective committees are also larger, more independent, and meet more frequently. Finally, we propose a new method to classify industries based on their sensitivity to certain stakeholder groups and find that the effectiveness of committees focused on specific stakeholders is more pronounced in industries that are sensitive to these stakeholders.

Keywords: Sustainability governance; Environmental committee; Corporate social performance; Voluntary accountability; Shared value creation; Sustainability risk management (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

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DOI: 10.1007/s10551-017-3453-2

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