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Economic Policy Uncertainty and Ecological Performance of European Companies: Does the Role of the Board Matter?

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  • Imen Ayadi
  • Nazim Hussain
  • Erick Mwambuli

Abstract

European companies face a pressing challenge: reconciling the growing demands for environmental sustainability with increased economic uncertainty stemming from the COVID‐19 crisis and geopolitical tensions. This study investigates the impact of economic policy uncertainty (EPU) on the ecological performance of publicly traded European companies, considering environmental, social, and governance (ESG) factors. Additionally, we explore the moderating role of the board of directors (BoD) in this complex relationship. Employing a system generalized method of moments (GMM) regression analysis on a sample of 1738 firms across 22 European countries during the period 2017–2023, our study reveals a negative effect of EPU on ecological performance, with the BoD acting as a crucial moderator. Companies with independent, diverse, and experienced BoD in ESG matters exhibit greater resilience to economic uncertainty. This research contributes both theoretically and practically to understanding firms' environmental decision‐making during uncertain times, providing valuable recommendations for executives, and informing policymakers in sustainable policy formulation.

Suggested Citation

  • Imen Ayadi & Nazim Hussain & Erick Mwambuli, 2025. "Economic Policy Uncertainty and Ecological Performance of European Companies: Does the Role of the Board Matter?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3138-3149, May.
    • Handle: RePEc:wly:corsem:v:32:y:2025:i:3:p:3138-3149
    DOI: 10.1002/csr.3102
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