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Board Capital and CEO Power Configurations to Promote ESG Performance: The Case of the European Banking Industry

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  • Nieves Remo‐Diez
  • Cristina Mendaña‐Cuervo
  • Mar Arenas‐Parra

Abstract

Board capital and CEOs are powerful actors in improving companies' ability to implement effective sustainability strategies, balance stakeholder interests, and align corporate governance with sustainable objectives. This ultimately leads to higher environmental, social, and governance (ESG) scores. This study explores the combined effect of board capital (specific skills, tenure, gender diversity, and affiliations) and CEO power (formal and informal) in achieving high ESG performance by linking resource dependence theory to complexity theory. Using a qualitative fuzzy‐set comparative analysis and data on European banks from 2018 to 2020, we find that regardless of the CEO's formal power, banks need an informally powerful CEO or board members with important advisory capabilities for managers in their decision‐making activities. In contrast, a powerful CEO, both formal and informal, reduces the effect of board capital in terms of ESG disclosures. The argument that “one size” does not fit all is confirmed. It offers valuable insights into strategic decision‐makers and banking supervisory authorities when setting and monitoring guidelines for board composition.

Suggested Citation

  • Nieves Remo‐Diez & Cristina Mendaña‐Cuervo & Mar Arenas‐Parra, 2025. "Board Capital and CEO Power Configurations to Promote ESG Performance: The Case of the European Banking Industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(2), pages 2815-2834, March.
    • Handle: RePEc:wly:corsem:v:32:y:2025:i:2:p:2815-2834
    DOI: 10.1002/csr.3106
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