Board and management characteristics effect on firms' ESG scores

Abstract

The subject of sustainability has evolved over the years, and firms have been put into the spotlight to provide resources to manage and minimize the problems we face. This paper explores how board and management characteristics are associated with the ESG performance of large European firms, overlooking nine years. Using data from Reuters Refinitiv Eikon, five hypotheses were tested regarding the association between ESG scores and board gender diversity, board size, CEO gender, executive management gender, and CEO duality. We conclude that there are characteristics that are associated with the ESG performance of the firm. However, the development during the nine years of interest has shown that well-established differences between men and women are decreasing, and differences between non-diversified and diversified boards of directors and management boards are increasing. Stakeholder theory sheds light on this area as our findings suggest that characteristics are associated with different stakeholder prioritizations. Our results add to previous literature and highlight important areas for future research and can be further used while analyzing potential solutions for the sustainability problem.