The Heterogeneity of Board-Level Sustainability Committees and Corporate Social Performance

55 Pages Posted: 21 Jan 2017 Last revised: 1 Jun 2018

See all articles by Jenna Burke

Jenna Burke

University of Colorado at Denver

Rani Hoitash

Bentley University - Department of Accountancy

Udi Hoitash

Northeastern University - Accounting Group

Date Written: January 5, 2017

Abstract

This paper explores an increasingly prevalent element of board-level commitment to sustainability. We propose a theoretical framework under which the existence and associated actions of board-level sustainability committees are motivated by shared value creation, where the interests of a diverse group of stakeholders are satisfied and sufficient profit is achieved. Using hand-collected data, we find that sustainability committees are heterogeneous in focus and vary in their effectiveness. Specifically, we disaggregate the sustainability committee construct based on stakeholder group focus (i.e., community, employee, environment, consumer/supplier) and find that associations between sustainability committees and performance outcomes are stronger when committees focused on a specific stakeholder group are paired with relevant performance outcomes. We generally find that sustainability committees are effective at impacting relevant strengths, but do not mitigate relevant concerns. These results are consistent with the shared value framework, where committees both generate value by pursuing sustainability-related opportunities and protect value by monitoring, but not necessarily mitigating sustainability-related risks. Univariate tests suggest that effective committees are also larger, more independent, and meet more frequently. Finally, we propose a new method to classify industries based on their sensitivity to certain stakeholder groups and find that the effectiveness of committees focused on specific stakeholders is more pronounced in industries that are sensitive to these stakeholders.

Keywords: Sustainability governance, environmental committee, corporate social performance, voluntary accountability; shared value creation, sustainability risk management

JEL Classification: A13, I31, J24, J28, M00, M1, M14, M41

Suggested Citation

Burke, Jenna and Hoitash, Rani and Hoitash, Udi, The Heterogeneity of Board-Level Sustainability Committees and Corporate Social Performance (January 5, 2017). Journal of Business Ethics, Forthcoming; Northeastern U. D’Amore-McKim School of Business Research Paper No. 2902122. Available at SSRN: https://ssrn.com/abstract=2902122

Jenna Burke (Contact Author)

University of Colorado at Denver ( email )

Box 173364
1250 14th Street
Denver, CO 80217
United States

Rani Hoitash

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452-4705
United States

Udi Hoitash

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States
671-373-5839 (Phone)

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