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Environmental performance and firm performance in Europe: The moderating role of board governance

Author

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  • Marcel Dohrmann
  • Monica Martinez‐Blasco
  • Andreas Moring
  • Jordi Cuadros Margarit

Abstract

This research presents novel insights into the relationship between environmental performance and firm performance, focusing on the moderating role of board governance. Unlike the single‐dimensional examination in previous studies, we examine five board variables collectively in our moderator analysis. Employing ordinary least squares regression and a series of robustness tests, we investigate 582 European listed firms across various industries from 2016 to 2021. Our findings reveal a positive influence of environmental performance on firm performance, measured by Tobin's Q and ROA. Furthermore, we find that board independence, gender diversity and audit committee independence moderate this relationship. To address potential endogeneity issues, we employ GMM modelling. This study significantly contributes to the environmental performance and firm performance literature by offering evidence on the moderating role of board mechanisms. Moreover, it offers valuable insights for policymakers and practitioners, highlighting the need to monitor corporate boards for improved environmental and financial outcomes.

Suggested Citation

  • Marcel Dohrmann & Monica Martinez‐Blasco & Andreas Moring & Jordi Cuadros Margarit, 2024. "Environmental performance and firm performance in Europe: The moderating role of board governance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(6), pages 5863-5880, November.
    • Handle: RePEc:wly:corsem:v:31:y:2024:i:6:p:5863-5880
    DOI: 10.1002/csr.2898
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    2. Amal Yamani, 2024. "The synergistic influence of board gender diversity and audit committee on the financial performance of Saudi Arabian banks," International Journal of Accounting, Business and Finance, Indian Accounting Association, Patna Branch, vol. 3(2), pages 61-77.
    3. Siyu Shen & Jun Xie & Hidemichi Fujii & Alexander Ryota Keeley & Shunsuke Managi, 2025. "Does environmental materiality matter to corporate financial performance: Evidence from 34 countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(2), pages 2390-2411, March.
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    5. Dalia Utama Zulnisyam & Rohail Hassan & Nurwati A. Ahmad‐Zaluki, 2026. "When Bigger Is Not Better: How Firm Size Shapes the Board Diversity–Profitability Nexus," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 33(1), pages 1158-1172, January.
    6. Daniel X. Zhang & Jessica K. Sun & Yuan Ding, 2025. "Greenhouse Gas Emission Disclosure and Firm Systematic Risk: How Leadership Gender Diversity Shapes the Impact," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(4), pages 5658-5675, July.
    7. Ajithakumari Vijayappan Nair Biju & Sreelekshmi Geetha & Salu Prasad & Aghila Sasidharan & Ambili Jayachandran, 2025. "ESG‐Firm Performance Nexus: Evidence From an Emerging Economy," Business Strategy and the Environment, Wiley Blackwell, vol. 34(3), pages 3469-3496, March.
    8. Hayam Wahba & Heba B. Hathout, 2026. "Do board characteristics moderate the relationship between ESG and financial performance? Evidence from African listed companies," Future Business Journal, Springer, vol. 12(1), pages 1-22, December.

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