Renewable Governance: Good for the Environment?
65 Pages Posted: 2 Aug 2018 Last revised: 14 Apr 2020
Date Written: March 31, 2020
We test the impact of firms’ corporate governance structures (G) on firms’ environmental performance (E) in an international sample. We find strong evidence that better governance improves firms’ environmental performance, including in settings where environmental risks are most salient. Governance mechanisms that focus on board renewal through enhanced investor power in director elections or appointment of female directors are associated with the greatest improvements. Quasi-exogenous shocks to these board renewal mechanisms support a causal interpretation—that is, G drives E. Female directors have a stand-alone impact, as the positive female director effect holds when we directly control for director characteristics.
Keywords: Corporate sustainability, Corporate social responsibility, ESG, Corporate governance, Ownership structure, Insider control, Environmental performance
JEL Classification: G15, G23, G32
Suggested Citation: Suggested Citation