Understanding the Role of Corporate Governance in Driving Sustainability in Europe

Abstract

The present study analyzes the impact that the structure of the board of directors and its organization have on sustainability, especially on social and environmental pillar scores, in the European country in the period 2018-2022. The Refinitiv Eikon database is the main source, accumulating a number of 15,575 observations for the analyzed period. In order to analyze the structure of the board of directors and its way of organization, five independent variables were taken into account, represented by the number of directors in boards, how many of them are independent members and how many women are in board, the duality of the CEO and the total number of meetings in a year. Sustainability was analyzed using data collected for social and environmental performance and represented the dependent variables of the study. Using SPSS software, data were extracted from Refinitiv Eikon for 3,115 companies using econometric methods (multiple linear regression), as well as correlation matrix and descriptive statistics. The results indicate that boards with an increased proportion of independent and female directors, accompanied by a dual-role CEO, contribute to improved sustainability. Positive social and environmental performance effects associated with board size, degree of independence, gender diversity, and CEO duality were also observed. In contrast to previous hypotheses, no relationship was identified between the frequency of board meetings and social and environmental performance.

Keywords

• board size
• board gender diversity
• board independence
• ceo duality
• board meetings
• social performance
• environmental performance
• european overview