Corporate Governance: Implications for Environmental, Social, and Governance (ESG) Performance
Abstract
This research was conducted to examine the impact of board diversity on the ESG (environmental, social, and governance) performance of companies. The study investigates board diversity in terms of board attributes such as board size, board gender diversity, and board independence. The data used is secondary data obtained from financial and sustainability reports of manufacturing companies listed on the Indonesia Stock Exchange from 2018 to 2022. The sample of this research consists of 29 companies, with a total of 145 data points. The sampling method used to obtain data is purposive sampling based on certain criteria. The analysis method used is panel regression, and STATA software is employed for data processing. The results of the study indicate that board gender diversity and board size do not affect ESG performance. However, board independence does have an impact on ESG performance.
Keywords:
Board gender diversity, board size, board independence, and ESG
References
Adams, R. B., Licht, A. N., & Sagiv, L. (2021). Shareholders and stakeholders: How do directors decide? Strategic Management Journal, 32(12), 1331–1355. https://doi.org/10.1002/smj.940
Almeyda, R., & Darmansyah, A. (2019). The Influence of Environmental, Social, and Governance (ESG) Disclosure on Firm Financial Performance.
Arayssi, M., Jizi, M., & Tabaja, H. H. (2020). The impact of board composition on the level of ESG disclosures in GCC countries. Sustainability Accounting, Management and Policy Journal, 11(1), 137–161. https://doi.org/10.1108/SAMPJ-05-2018-0136
Baselga-Pascual, L., Trujillo-Ponce, A., Vähämaa, E., & Vähämaa, S. (2018). Ethical Reputation of Financial Institutions: Do Board Characteristics Matter? Journal of Business Ethics, 148(3), 489–510. https://doi.org/10.1007/s10551-015-2949-x
Bătae, O. M., Dragomir, V. D., & Feleagă, L. (2021). The relationship between environmental, social, and financial performance in the banking sector: A European study. Journal of Cleaner Production, 290. https://doi.org/10.1016/j.jclepro.2021.125791
Birindelli, G., Dell’Atti, S., Iannuzzi, A. P., & Savioli, M. (2018). Composition and activity of the board of directors: Impact on ESG performance in the banking system. Sustainability (Switzerland), 10(12). https://doi.org/10.3390/su10124699
Birindelli, G., Iannuzzi, A. P., & Savioli, M. (2019). The impact of women leaders on environmental performance: Evidence on gender diversity in banks. Corporate Social Responsibility and Environmental Management, 26(6), 1485–1499. https://doi.org/10.1002/csr.1762
Comoli, M., Tettamanzi, P., & Murgolo, M. (2023). Accounting for ‘ESG’ under Disruptions: A Systematic Literature Network Analysis. In Sustainability (Switzerland) (Vol. 15, Issue 8). MDPI. https://doi.org/10.3390/su15086633
Cucari, N., Esposito De Falco, S., & Orlando, B. (2018). Diversity of Board of Directors and Environmental Social Governance: Evidence from Italian Listed Companies. Corporate Social Responsibility and Environmental Management, 25(3), 250–266. https://doi.org/10.1002/csr.1452
De Lucia, C., Pazienza, P., & Bartlett, M. (2020). Does good ESG lead to better financial performances by firms? Machine learning and logistic regression models of public enterprises in Europe. Sustainability (Switzerland), 12(13). https://doi.org/10.3390/su12135317
Eagly, A. H., & Wood, W. (2013). The Nature-Nurture Debates: 25 Years of Challenges in Understanding the Psychology of Gender. Perspectives on Psychological Science, 8(3), 340–357. https://doi.org/10.1177/1745691613484767
Fama, E. F., & Jensen, M. C. (2020). SEPARATION OF OWNERSHIP AND CONTROL*. http://www.journals.uchicago.edu/t-and-c
Fianica, C., Isna, W., & Rahmawati, P. (2021). ANALISIS PENGUNGKAPAN CORPORATE SOCIAL RESPONSIBILITY BERDASARKAN GLOBAL REPORTING INITIATIVE G4.
Galletta, S., Mazzù, S., Naciti, V., & Vermiglio, C. (2022). Gender diversity and sustainability performance in the banking industry. Corporate Social Responsibility and Environmental Management, 29(1), 161–174. https://doi.org/10.1002/csr.2191
García-Sánchez, I. M., Martínez-Ferrero, J., & García-Meca, E. (2018). Board of Directors and CSR in Banking: The Moderating Role of Bank Regulation and Investor Protection Strength. Australian Accounting Review, 28(3), 428–445. https://doi.org/10.1111/auar.12199
Haque, F., & Ntim, C. G. (2018). Environmental Policy, Sustainable Development, Governance Mechanisms and Environmental Performance. Business Strategy and the Environment, 27(3), 415–435. https://doi.org/10.1002/bse.2007
Harjoto, M., Laksmana, I., & Lee, R. (2015). Board Diversity and Corporate Social Responsibility. Journal of Business Ethics, 132(4), 641–660. https://doi.org/10.1007/s10551-014-2343-0
Husted, B. W., & Sousa-Filho, J. M. de. (2019). Board structure and environmental, social, and governance disclosure in Latin America. Journal of Business Research, 102, 220–227. https://doi.org/10.1016/j.jbusres.2018.01.017
Jizi, M. (2017). The Influence of Board Composition on Sustainable Development Disclosure. Business Strategy and the Environment, 26(5), 640–655. https://doi.org/10.1002/bse.1943
Kanter, R. M. (1977). Men and Women of the Corporation.
KONRAD, A. M., KRAMER, V., & ERKUT, S. (2008). Critical Mass:. The Impact of Three or More Women on Corporate Boards. Organizational Dynamics, 37(2), 145–164. https://doi.org/10.1016/j.orgdyn.2008.02.005
La Torre, M., Leo, S., & Panetta, I. C. (2021). Banks and environmental, social and governance drivers: Follow the market or the authorities? Corporate Social Responsibility and Environmental Management, 28(6), 1620–1634. https://doi.org/10.1002/csr.2132
Lagasio, V., & Cucari, N. (2019). Corporate governance and environmental social governance disclosure: A meta-analytical review. In Corporate Social Responsibility and Environmental Management (Vol. 26, Issue 4, pp. 701–711). John Wiley and Sons Ltd. https://doi.org/10.1002/csr.1716
Lu, J., & Wang, J. (2021). Corporate governance, law, culture, environmental performance and CSR disclosure: A global perspective. Journal of International Financial Markets, Institutions and Money, 70. https://doi.org/10.1016/j.intfin.2020.101264
Manita, R., Bruna, M. G., Dang, R., & Houanti, L. (2018). Board gender diversity and ESG disclosure: evidence from the USA. Journal of Applied Accounting Research, 19(2), 206–224. https://doi.org/10.1108/JAAR-01-2017-0024
Maxfield, S., Wang, L., & Magaldi de Sousa, M. (2018). The Effectiveness of Bank Governance Reforms in the Wake of the Financial Crisis: A Stakeholder Approach. Journal of Business Ethics, 150(2), 485–503. https://doi.org/10.1007/s10551-016-3116-8
Menicucci, E., & Paolucci, G. (2022a). Board Diversity and ESG Performance: Evidence from the Italian Banking Sector. Sustainability (Switzerland), 14(20). https://doi.org/10.3390/su142013447
Miranda, B., Delgado, C., & Branco, M. C. (2023). Board Characteristics, Social Trust and ESG Performance in the European Banking Sector. Journal of Risk and Financial Management, 16(4). https://doi.org/10.3390/jrfm16040244
Nicolò, G., Zampone, G., Sannino, G., & De Iorio, S. (2022). Sustainable corporate governance and non-financial disclosure in Europe: does the gender diversity matter? Journal of Applied Accounting Research, 23(1), 227–249. https://doi.org/10.1108/JAAR-04-2021-0100
Ortas, E., Álvarez, I., & Zubeltzu, E. (2017). Firms’ board independence and corporate social performance: A meta-analysis. Sustainability (Switzerland), 9(6). https://doi.org/10.3390/su9061006
Pucheta-Martínez, M. C., Gallego-Álvarez, I., & Bel-Oms, I. (2021). Corporate social and environmental disclosure as a sustainable development tool provided by board sub-committees: Do women directors play a relevant moderating role? Business Strategy and the Environment, 30(8), 3485–3501. https://doi.org/10.1002/bse.2815
Qaderi, S. A., Ghaleb, B. A. A., Hashed, A. A., Chandren, S., & Abdullah, Z. (2022). Board Characteristics and Integrated Reporting Strategy: Does Sustainability Committee Matter? Sustainability (Switzerland), 14(10). https://doi.org/10.3390/su14106092
Romano, M., Cirillo, A., Favino, C., & Netti, A. (2020). ESG (Environmental, social and governance) performance and board gender diversity: The moderating role of CEO duality. Sustainability (Switzerland), 12(21), 1–16. https://doi.org/10.3390/su12219298
Serly, S., & Susanti, M. (2021). Pengaruh atribut tata kelola dan karakteristik perusahaan terhadap kebijakan dividen pada perusahaan di BEI. Jurnal Ekonomi Modernisasi, 17(3), 196–215. https://doi.org/10.21067/jem.v17i3.5872
Shakil, M. H., Tasnia, M., & Mostafiz, M. I. (2020). Board gender diversity and environmental, social and governance performance of US banks: moderating role of environmental, social and corporate governance controversies. International Journal of Bank Marketing, 39(4), 661–677. https://doi.org/10.1108/IJBM-04-2020-0210
Tapver, T. (2019). CSR reporting in banks: does the composition of the board of directors matter? Quantitative Finance and Economics, 3(2), 286–314. https://doi.org/10.3934/QFE.2019.2.286
Tasnia, M., Syed Jaafar AlHabshi, S. M., & Rosman, R. (2020). The impact of corporate social responsibility on stock price volatility of the US banks: a moderating role of tax. Journal of Financial Reporting and Accounting, 19(1), 77–91. https://doi.org/10.1108/JFRA-01-2020-0020
Wasiuzzaman, S., & Wan Mohammad, W. M. (2020). Board gender diversity and transparency of environmental, social and governance disclosure: Evidence from Malaysia. Managerial and Decision Economics, 41(1), 145–156. https://doi.org/10.1002/mde.3099
Zahid, M., Rahman, H. U., Ali, W., Khan, M., Alharthi, M., Imran Qureshi, M., & Jan, A. (2020). Boardroom gender diversity: Implications for corporate sustainability disclosures in Malaysia. Journal of Cleaner Production, 244. https://doi.org/10.1016/j.jclepro.2019.118683
Almeyda, R., & Darmansyah, A. (2019). The Influence of Environmental, Social, and Governance (ESG) Disclosure on Firm Financial Performance.
Arayssi, M., Jizi, M., & Tabaja, H. H. (2020). The impact of board composition on the level of ESG disclosures in GCC countries. Sustainability Accounting, Management and Policy Journal, 11(1), 137–161. https://doi.org/10.1108/SAMPJ-05-2018-0136
Baselga-Pascual, L., Trujillo-Ponce, A., Vähämaa, E., & Vähämaa, S. (2018). Ethical Reputation of Financial Institutions: Do Board Characteristics Matter? Journal of Business Ethics, 148(3), 489–510. https://doi.org/10.1007/s10551-015-2949-x
Bătae, O. M., Dragomir, V. D., & Feleagă, L. (2021). The relationship between environmental, social, and financial performance in the banking sector: A European study. Journal of Cleaner Production, 290. https://doi.org/10.1016/j.jclepro.2021.125791
Birindelli, G., Dell’Atti, S., Iannuzzi, A. P., & Savioli, M. (2018). Composition and activity of the board of directors: Impact on ESG performance in the banking system. Sustainability (Switzerland), 10(12). https://doi.org/10.3390/su10124699
Birindelli, G., Iannuzzi, A. P., & Savioli, M. (2019). The impact of women leaders on environmental performance: Evidence on gender diversity in banks. Corporate Social Responsibility and Environmental Management, 26(6), 1485–1499. https://doi.org/10.1002/csr.1762
Comoli, M., Tettamanzi, P., & Murgolo, M. (2023). Accounting for ‘ESG’ under Disruptions: A Systematic Literature Network Analysis. In Sustainability (Switzerland) (Vol. 15, Issue 8). MDPI. https://doi.org/10.3390/su15086633
Cucari, N., Esposito De Falco, S., & Orlando, B. (2018). Diversity of Board of Directors and Environmental Social Governance: Evidence from Italian Listed Companies. Corporate Social Responsibility and Environmental Management, 25(3), 250–266. https://doi.org/10.1002/csr.1452
De Lucia, C., Pazienza, P., & Bartlett, M. (2020). Does good ESG lead to better financial performances by firms? Machine learning and logistic regression models of public enterprises in Europe. Sustainability (Switzerland), 12(13). https://doi.org/10.3390/su12135317
Eagly, A. H., & Wood, W. (2013). The Nature-Nurture Debates: 25 Years of Challenges in Understanding the Psychology of Gender. Perspectives on Psychological Science, 8(3), 340–357. https://doi.org/10.1177/1745691613484767
Fama, E. F., & Jensen, M. C. (2020). SEPARATION OF OWNERSHIP AND CONTROL*. http://www.journals.uchicago.edu/t-and-c
Fianica, C., Isna, W., & Rahmawati, P. (2021). ANALISIS PENGUNGKAPAN CORPORATE SOCIAL RESPONSIBILITY BERDASARKAN GLOBAL REPORTING INITIATIVE G4.
Galletta, S., Mazzù, S., Naciti, V., & Vermiglio, C. (2022). Gender diversity and sustainability performance in the banking industry. Corporate Social Responsibility and Environmental Management, 29(1), 161–174. https://doi.org/10.1002/csr.2191
García-Sánchez, I. M., Martínez-Ferrero, J., & García-Meca, E. (2018). Board of Directors and CSR in Banking: The Moderating Role of Bank Regulation and Investor Protection Strength. Australian Accounting Review, 28(3), 428–445. https://doi.org/10.1111/auar.12199
Haque, F., & Ntim, C. G. (2018). Environmental Policy, Sustainable Development, Governance Mechanisms and Environmental Performance. Business Strategy and the Environment, 27(3), 415–435. https://doi.org/10.1002/bse.2007
Harjoto, M., Laksmana, I., & Lee, R. (2015). Board Diversity and Corporate Social Responsibility. Journal of Business Ethics, 132(4), 641–660. https://doi.org/10.1007/s10551-014-2343-0
Husted, B. W., & Sousa-Filho, J. M. de. (2019). Board structure and environmental, social, and governance disclosure in Latin America. Journal of Business Research, 102, 220–227. https://doi.org/10.1016/j.jbusres.2018.01.017
Jizi, M. (2017). The Influence of Board Composition on Sustainable Development Disclosure. Business Strategy and the Environment, 26(5), 640–655. https://doi.org/10.1002/bse.1943
Kanter, R. M. (1977). Men and Women of the Corporation.
KONRAD, A. M., KRAMER, V., & ERKUT, S. (2008). Critical Mass:. The Impact of Three or More Women on Corporate Boards. Organizational Dynamics, 37(2), 145–164. https://doi.org/10.1016/j.orgdyn.2008.02.005
La Torre, M., Leo, S., & Panetta, I. C. (2021). Banks and environmental, social and governance drivers: Follow the market or the authorities? Corporate Social Responsibility and Environmental Management, 28(6), 1620–1634. https://doi.org/10.1002/csr.2132
Lagasio, V., & Cucari, N. (2019). Corporate governance and environmental social governance disclosure: A meta-analytical review. In Corporate Social Responsibility and Environmental Management (Vol. 26, Issue 4, pp. 701–711). John Wiley and Sons Ltd. https://doi.org/10.1002/csr.1716
Lu, J., & Wang, J. (2021). Corporate governance, law, culture, environmental performance and CSR disclosure: A global perspective. Journal of International Financial Markets, Institutions and Money, 70. https://doi.org/10.1016/j.intfin.2020.101264
Manita, R., Bruna, M. G., Dang, R., & Houanti, L. (2018). Board gender diversity and ESG disclosure: evidence from the USA. Journal of Applied Accounting Research, 19(2), 206–224. https://doi.org/10.1108/JAAR-01-2017-0024
Maxfield, S., Wang, L., & Magaldi de Sousa, M. (2018). The Effectiveness of Bank Governance Reforms in the Wake of the Financial Crisis: A Stakeholder Approach. Journal of Business Ethics, 150(2), 485–503. https://doi.org/10.1007/s10551-016-3116-8
Menicucci, E., & Paolucci, G. (2022a). Board Diversity and ESG Performance: Evidence from the Italian Banking Sector. Sustainability (Switzerland), 14(20). https://doi.org/10.3390/su142013447
Miranda, B., Delgado, C., & Branco, M. C. (2023). Board Characteristics, Social Trust and ESG Performance in the European Banking Sector. Journal of Risk and Financial Management, 16(4). https://doi.org/10.3390/jrfm16040244
Nicolò, G., Zampone, G., Sannino, G., & De Iorio, S. (2022). Sustainable corporate governance and non-financial disclosure in Europe: does the gender diversity matter? Journal of Applied Accounting Research, 23(1), 227–249. https://doi.org/10.1108/JAAR-04-2021-0100
Ortas, E., Álvarez, I., & Zubeltzu, E. (2017). Firms’ board independence and corporate social performance: A meta-analysis. Sustainability (Switzerland), 9(6). https://doi.org/10.3390/su9061006
Pucheta-Martínez, M. C., Gallego-Álvarez, I., & Bel-Oms, I. (2021). Corporate social and environmental disclosure as a sustainable development tool provided by board sub-committees: Do women directors play a relevant moderating role? Business Strategy and the Environment, 30(8), 3485–3501. https://doi.org/10.1002/bse.2815
Qaderi, S. A., Ghaleb, B. A. A., Hashed, A. A., Chandren, S., & Abdullah, Z. (2022). Board Characteristics and Integrated Reporting Strategy: Does Sustainability Committee Matter? Sustainability (Switzerland), 14(10). https://doi.org/10.3390/su14106092
Romano, M., Cirillo, A., Favino, C., & Netti, A. (2020). ESG (Environmental, social and governance) performance and board gender diversity: The moderating role of CEO duality. Sustainability (Switzerland), 12(21), 1–16. https://doi.org/10.3390/su12219298
Serly, S., & Susanti, M. (2021). Pengaruh atribut tata kelola dan karakteristik perusahaan terhadap kebijakan dividen pada perusahaan di BEI. Jurnal Ekonomi Modernisasi, 17(3), 196–215. https://doi.org/10.21067/jem.v17i3.5872
Shakil, M. H., Tasnia, M., & Mostafiz, M. I. (2020). Board gender diversity and environmental, social and governance performance of US banks: moderating role of environmental, social and corporate governance controversies. International Journal of Bank Marketing, 39(4), 661–677. https://doi.org/10.1108/IJBM-04-2020-0210
Tapver, T. (2019). CSR reporting in banks: does the composition of the board of directors matter? Quantitative Finance and Economics, 3(2), 286–314. https://doi.org/10.3934/QFE.2019.2.286
Tasnia, M., Syed Jaafar AlHabshi, S. M., & Rosman, R. (2020). The impact of corporate social responsibility on stock price volatility of the US banks: a moderating role of tax. Journal of Financial Reporting and Accounting, 19(1), 77–91. https://doi.org/10.1108/JFRA-01-2020-0020
Wasiuzzaman, S., & Wan Mohammad, W. M. (2020). Board gender diversity and transparency of environmental, social and governance disclosure: Evidence from Malaysia. Managerial and Decision Economics, 41(1), 145–156. https://doi.org/10.1002/mde.3099
Zahid, M., Rahman, H. U., Ali, W., Khan, M., Alharthi, M., Imran Qureshi, M., & Jan, A. (2020). Boardroom gender diversity: Implications for corporate sustainability disclosures in Malaysia. Journal of Cleaner Production, 244. https://doi.org/10.1016/j.jclepro.2019.118683
Published
2025-01-30
How to Cite
Khornida, D., Sitorus, W., & Yuwono, W. (2025). Corporate Governance: Implications for Environmental, Social, and Governance (ESG) Performance. Jesya (Jurnal Ekonomi Dan Ekonomi Syariah), 8(1), 579-582. https://doi.org/https://doi.org/10.36778/jesya.v8i1.1945
Section
Articles
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
