Environmental Uncertainty and ESG Performance in Chinese and US Banks: The Moderating Roles of ESG Controversies and Board Gender Diversity

This study examines the relationship between environmental uncertainty and ESG performance, with a focus on the moderating roles of ESG controversies and gender diversity on the board. It utilizes an unbalanced panel dataset of 315 Chinese and US banks from 2011 to 2022. By employing a two-step system GMM and 2SLS estimations, this study finds that environmental uncertainty adversely influences ESG performance. The findings also suggest a U-shaped relationship between environmental uncertainty and ESG performance, indicating an adverse effect of environmental uncertainty on ESG performance, which is initially negative but weakens throughout environmental uncertainty and turns positive when the environment is highly uncertain. However, ESG controversies moderate these effects, as does the moderating role of gender board diversity, especially in US banks. Gender diversity helped mitigate the adverse impacts of uncertainty on ESG performance, though this effect is weaker in Chinese banks. The findings offer significant policy insights for bank managers, policymakers, and regulators aiming to improve ESG strategies in the face of crises and global uncertainties.