Board Risk Oversight and Environmental and Social Responsibility
77 Pages Posted: 26 Sep 2020 Last revised: 21 Oct 2020
Date Written: September 19, 2020
Risk oversight has emerged as an important responsibility of corporate boards. At the same time, firms are increasingly recognizing the risks that social and environmental issues pose to investors and stakeholders. In this study, we examine the relation between board risk oversight and firms’ environmental and social (E&S) ratings. Using proprietary data on the board risk oversight practices of firms from 29 countries, we show that firms with more robust risk oversight have higher E&S ratings, are more likely to integrate E&S issues into their strategies and executive compensation contracts, and ultimately experience better E&S outcomes.
Keywords: corporate boards; corporate social responsibility; environmental and social ratings; risk management
JEL Classification: G15, G23, G32
Suggested Citation: Suggested Citation