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Do Board Expertise and Networked Boards Affect Environmental Performance?

Author

Listed:
  • Swarnodeep Homroy

    (University of Groningen)

  • Aurelie Slechten

    (Lancaster University)

Abstract

We examine the resource provision role of the board of directors in ensuring substantive corporate sustainability practices. Specifically, we examine two channels of resource provision (i.e., the presence of non-executive directors with previous experience in environmental issues—EEDs—and network connections of EEDs) that can affect a firm’s ethical and environmental behavior. Using greenhouse gas (GHG) emissions data from FTSE 350 firms, as a measure of environmental performance, we show that the presence of EEDs on the board is associated with lower GHG emissions. Further, firms with better-networked EEDs have better environmental performance. A possible mechanism is that firms with EEDs invest more in environmental technology. These results suggest that, in addition to the traditional role of shareholder value maximization, the board of directors also caters to the interests of wider stakeholders of the firm by facilitating substantive ethical practices.

Suggested Citation

  • Swarnodeep Homroy & Aurelie Slechten, 2019. "Do Board Expertise and Networked Boards Affect Environmental Performance?," Journal of Business Ethics, Springer, vol. 158(1), pages 269-292, August.
    • Handle: RePEc:kap:jbuset:v:158:y:2019:i:1:d:10.1007_s10551-017-3769-y
    DOI: 10.1007/s10551-017-3769-y
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    More about this item

    Keywords

    Director expertise; Director networks; Emissions; Environmental performance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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