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ESG score, board structure and the impact of the non-financial reporting directive on European firms

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  • Bigelli, Marco
  • Mengoli, Stefano
  • Sandri, Sandro

Abstract

The primary objective of this research is to examine the impact of the EU Non-Financial Reporting Directive on the significance of specific board characteristics in promoting higher ESG scores among 835 European companies listed from 2002 to 2020. Empirical results indicate that gender diversity, cultural diversity, a higher number of independent directors on the board, and the presence of a CSR committee all significantly contribute to achieving higher ESG scores. Furthermore, the Non-Financial Reporting Directive 95/2014, which requires large EU firms to report on various environmental, social, and governance issues, not only drives EU firms to attain higher ESG scores but also significantly reduces the ESG gap between companies with and without a CSR committee. Meanwhile, other board characteristics have maintained their relevance to a substantial extent.

Suggested Citation

  • Bigelli, Marco & Mengoli, Stefano & Sandri, Sandro, 2023. "ESG score, board structure and the impact of the non-financial reporting directive on European firms," Journal of Economics and Business, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:jebusi:v:127:y:2023:i:c:s0148619523000267
    DOI: 10.1016/j.jeconbus.2023.106133
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    More about this item

    Keywords

    ESG score; Board characteristics; Gender diversity; Cultural diversity; EU 95/2014 directive;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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