Innovation and Green Development (Dec 2024)
ESG reporting, corporate green innovation and interaction role of board diversity: A new insight from US
Abstract
The Corporates’ operations play a crucial role in environmental, social, and governance (ESG) practices to improve green innovation; thus, how to promote green practices through effective ESG reporting has attracted the attention of researchers. Through this lens, the current study seeks to explore the impact of ESG reporting on the direct and interaction impact of board diversity on green innovation in the context of a developed economy like the U.S. A total of 334 non-financial companies listed in the S&P 1500 Index were sampled for the period 2010 to 2021. Results of the study revealed that ESG rating has a significant and positive impact on the environmental pillar (EPS) and innovation scores (EIS). In addition, the CSR strategy score also has a positive relationship with EPS. Furthermore, board diversity positively impacts the relationship between ESG score, EPS, and EIS. Findings indicate that ESG reporting in U.S. firms improves green revenues, product innovation, and R&D activities aimed at promoting green innovation practices. Secondly, the CSR score also positively contributes to green innovation. Larger social and environmental practices (CSR) in US companies indicate higher eco-efficiency and implementation of clean technologies. In addition, board diversity in the US firms fosters green innovation through investments in green technologies and manufacturing eco-designed products. Based on our research findings, this study supports the stakeholder theory, a resource-based view, and the Upper-echelon theory.
