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Environmental
Corporate Social
Responsibility
Abstract
This study contributes to the work on board composition and firm cor-
porate social responsibility by extending it to the environmental domain. It
evaluates the relationship between boards of directors’ composition and en-
vironmental corporate social responsibility (ECSR) by integrating literatures
on board composition, firm corporate social responsibility, and individual
differences in attitudes toward and information about environmental issues.
Using disclosed company data and the natural environment ratings data from
Kinder Lydenberg Domini (KLD) Inc. for 78 Fortune 1000 companies, the study
finds that a higher proportion of outside board directors is associated with
more favorable ECSR and higher KLD strengths scores. Firms with boards
composed of three or more female directors received higher KLD strengths
scores. And, boards whose directors average closer to 56 years in age and
those with a higher proportion of Western European directors are more
likely to implement environmental governance structures or processes.
Our results also reinforce growing concerns around unidimensional KLD
measures.
1
Lehigh University
2
Pace University
Corresponding Author:
Corinne Post, Lehigh University, Corinne Post, 120 Lake Road, Basking Ridge, NJ 07920
Email: Corinne.Post@Lehigh.edu
190 Business & Society 50(1)
Keywords
board of directors, environmental corporate social responsibility (ECSR),
green governance, KLD measures, diversity
There is a strong impetus in the United States and abroad to diversify cor-
porate boards (Bilimoria, 2000; Kramer, Konrad, & Erkut, 2006; Ramírez,
2003; Sellers, 2007), based on the premise that diversity among board direc-
tors improves the chances that different knowledge domains, perspectives,
values, and ideas are considered in the decision-making process. At the same
time, the benefits of having such diversity are not clearly established (Burke,
2003; Sellers, 2007). The strategic decision-making literature recognizes the
composition of boards of directors as an important factor in corporate decision
making. For instance, Golden and Zajac (2001) argued that specific demo-
graphic features of boards’ directors contribute to strategic decision making.
Past research has shown board composition to be associated with philan-
thropy (Coffee & Wang, 1998; Wang & Coffee, 1992; Williams, 2003), employee
relations (Bernardi, Bosco, & Vassill, 2006; Johnson & Greening, 1999), R&D
investment intensity (Kor, 2006), environmental litigation (Kassinis & Vafeas,
2002), discussions of entrepreneurial issues (Tuggle, Schnatterly, & Johnson,
2010), and a number of other organizational outcomes.
Although there has been an interest in the relationship between board
composition and corporate social responsibility, less is known about how
board composition affects environmental corporate social responsibility (ECSR)
(Buchholtz, Brown, & Shabana, 2008). At the same time, board directors are
participating more actively in decision making around corporate environ-
mental policies (Kakabadse, 2007; Kassinis & Vafeas, 2002). Research on
individual ethics suggests that ethical and environmental values vary across
demographic characteristics. Furthermore, research on boards of directors indi-
cates that, compared to inside directors, outside directors place more value
on socially responsible philanthropy (Ibrahim & Angelidis, 1995). We, there-
fore, propose to examine the relationship between firms’ board of directors’
composition, in terms of directors’ insider/outsider status, gender, age, cul-
tural background, educational attainment, and firms’ ECSR.
The role of boards in corporate decision making and on firm performance
draws much ink in the strategic management literature. Boards influence firm
performance (Peng, 2004), strategic decision making (Golden & Zajac, 2001;
Jensen & Zajac, 2004; Westphal & Fredrickson, 2001), internationalization
strategies (Datta, Musteen, & Herrmann, 2009), R&D investment strategies
(Kor, 2006), and share price (Filatotchev & Bishop, 2002). Westphal and
Post et al. 191
Frederickson (2001) argued that board directors’ beliefs and prior experi-
ences influence firms’ strategic direction. We contend that prior beliefs and
values originate not only from directors’ insider/outsider status but also from
differences in their experiences and backgrounds (age, gender, cultural back-
ground, educational attainment). Broadly speaking, we therefore expect not
only the insider/outsider composition of boards but also boards’ demographic
composition to affect strategic decision making and corporate performance.
The managerial and popular press report with an increasing sense of
urgency about our planet’s environmental fragility and the role of industrial-
ization in accelerating global warming (Carey & Arndt, 2007; Fisher, 2007).
The overwhelming success of the documentary An Inconvenient Truth, which
explores global warming, the allocation of the Nobel Peace Prize to Wangari
Maathai in 2004 for her contribution to sustainable development, and to Vice-
President Al Gore and the Intergovernmental Panel on Climate Change in
2007 further underscore the rising concerns with the role of industrialization
in global warming. Corporate social responsibility has become more salient
to board members (Kakabadse, 2007) as thinking at the top of organizations
shifts toward more broadly defined performance than just the bottom line.
Environmental issues are an important aspect of corporate social responsibil-
ity, especially for companies that are responsible for high carbon dioxide
and chlorofluorocarbons emissions. Hence, corporate decision makers are
increasingly called upon to consider the broader environmental impact of
their business decisions. Boards may be moved to address ECSR issues for
political reasons (Bendell & Kearins, 2005; Kassinis & Vafeas, 2002), in
response to environmental legislation, or to preempt environmental litigation
(Kassinis & Vafeas, 2002). In this article, we argue that because individuals
appear to differ systematically in their information about and attitudes toward
environmental issues based on specific characteristics (insider/outsider sta-
tus, gender, age, and cultural and educational background), the composition
of boards along these characteristics may also shape a firm’s ECSR.
Informed by recent theoretical and practical work (Ilinitch, Soderstrom, &
Thomas, 1998) around the meaning and measurement of ECSR, we conceive
of ECSR as a firm’s environmental agenda and its performance in reducing
negative and increasing positive environmental outcomes. We draw on the
literature on diversity and decision making to form hypotheses about the rela-
tionship between board composition and ECSR. The rest of this article is
organized as follows. We start by synthesizing the research about diversity
and group decision making. Afterwards, we formulate hypotheses about the
relationships between board composition (in terms of insider/outsider status,
gender, age, cultural background, and educational attainment) and ECSR.
192 Business & Society 50(1)
Then, we describe our methods and provide the results from our analyses.
Finally, we discuss our results, identify the limitations of our study, and pro-
pose implications for research and practice.
Women and men appear to differ in values when it comes to social respon-
sibility. Researchers have argued that gender differences in moral reasoning
are rooted in early gender socialization (Chodorow, 1974; Gilligan, 1982).
A meta-analysis of gender differences in moral orientation (Jaffee & Hyde,
2000), which relied on 160 independent samples, showed that women are
somewhat more likely than men to use care reasoning (i.e., maintaining rela-
tionships, responding to the needs of others, and feeling a responsibility not
to hurt) but that men and women use similar principles of fairness and equity.
Many studies provide support for the assertion that women are more likely
than men to identify situations requiring ethical judgment and to behave
ethically (Albaum & Peterson, 2006; Burton & Hegarty, 1999; Forte, 2004;
Smith, Wokutch, Harrington, & Dennis, 2001). For example, women appear
to be more likely than men to recognize unethical actions described in infor-
mation systems scenarios (Khazanchi, 1995). Similarly, women are more
willing than men to behave ethically when presented with hypothetical moral
dilemmas in marketing (Malinowski & Berger, 1996).
A few studies find no gender differences in moral reasoning (Ergeneli &
Arikan, 2002; Weber & Wasieleski, 2001). An argument advanced for explain-
ing the lack of differences in moral reasoning between men and women holds
that workplace socialization, which operates similarly on both men and women,
attenuates any gender differences in ethical reasoning. Findings from a study
of accountants, for example, show that men and women behave similarly when
specific organizational rules are violated or tested, but when a situation is not
clearly delineated by organizational policy (i.e., when socialization about a
particular issue has not taken place), women are more likely than men to act
ethically (Smith & Rogers, 2000).
Post et al. 195
Some have argued that women’s more protective attitude toward the envi-
ronment stems from a closer identification with nature because of their repro-
ductive role, and others have argued that as a group, women may be more
aware of environmental exploitation because of their experience in a cultural
system of paternalistic exploitation (Wehrmeyer & McNeil, 2000). A large
body of evidence supports the view that women are more concerned than men
about perceived health and environmental risks (Bord & O’Connor, 1997;
Davidson & Freudenburg, 1996). Empirical evidence also suggests that women
are more likely than men to take actions to reduce perceived risks. As consum-
ers, for example, women are more likely than men to exhibit environment friendly
attitudes and behaviors (Mainieri, Barnett, Valdero, Unipan, & Oskamp, 1997).
Furthermore, even among experienced MBA students, women appear more
likely than men to support the enforcement of environmental accountability
standards (Fukukawa, Shafer, & Lee, 2007). In summary, though some studies
show no differences between men and women in attitudes toward the envi-
ronment (e.g., Hayes, 2001), the bulk of empirical evidence suggests that
women are generally more concerned than men with environmental issues
(Diamantopoulos, Schlegelmilch, Sinkovics, & Bohlen, 2003).
Furthermore, critical mass theory suggests that merely having one or two
women on a board of directors is not sufficient for change to happen (Konrad
et al., 2008; Kramer et al., 2006). Social pressures encourage minorities to
adopt or conform to the majority’s opinions (Asch, 1955; Nemeth, 1986). In
addition, when minorities are widely underrepresented in a team, they become
tokens for their minority group and, thereby, tend to be perceived as less
competent and be conferred lower status than majority members (Brewer &
Kramer, 1985; Kanter, 1977; Lord & Saenz, 1985). However, when minority
members form a critical mass in a group, interpersonal interactions improve.
In particular, in groups where majority members are exposed to at least three
minority opinions, the group tends to consider and learn from the minority
voice (Asch, 1955), especially when the minority opinions are consistent
(Nemeth, 1986). Therefore, we anticipate that unless boards have a critical mass
of three female directors, women are less likely to shape board decisions
(Konrad et al., 2008; Kramer et al., 2006). As a result, we anticipate that
ECSR will be higher in firms with three or more female directors.
The capacity for moral reasoning is thought to develop over time. Age
consistently explains a large proportion of variance in moral judgment,
196 Business & Society 50(1)
Method
Sample
The population for this study consists of the 49 electronics firms found in the
2006 list of Fortune 1000 companies and the 40 chemical firms found in the
2007 list of Fortune 1000 companies. Including firms from two very differ-
ent industries should help uncover relationships between BOD composition
and ECSR that are not confounded by industry structure, technologies, and
environmental issues. From this population we removed four firms that
merged with or were bought by other firms in the timeframe for which we
collected data about them. We also removed from the sample seven firms for
which the 2007 KLD1 STATS ratings of corporate social performance did not
provide data. After deletion of those companies our sample is 78 firms.
Measures
ECSR. We measure ECSR in two different ways. First, we rely on ECSR
disclosures as reported in firms’ annual reports, corporate environmental
reports, corporate websites, and government websites. Corporate disclosures
on environmental matters provide a measure of ECSR involvement (Morhardt,
Baird, & Freeman, 2002) that is reasonably well aligned with corporate envi-
ronmental performance (Clarkson, Lie, Richardson, & Vasvari, 2007). Sec-
ond, we use data from the proprietary KLD STATS database, issued by
198 Business & Society 50(1)
Kinder, Lydenberg, Domini, Inc. (KLD) that provides annual ratings of the
environmental, social, and governance actions of more than 3,000 publicly
traded companies.
ECSR disclosure. In an effort to operationalize ECSR disclosure, Ilinitch and
her colleagues (1998) decomposed the ECSR disclosure construct into four envi-
ronmental performance metrics. Clarkson and his colleagues (2007) expanded
the operationalization of ECSR disclosure to seven performance metrics: gover-
nance structure and management systems (e.g., environmental auditing policies),
credibility (e.g., participation in voluntary environmental initiatives), environ-
mental performance indicators (e.g., greenhouse gas emissions), environmental
vision and strategy claims (e.g., CEO statement to shareholders on environmental
performance), environmental spending (e.g., disclosure of fines paid for violating
environmental requirements), environmental profile (e.g., overview of the firm’s
environmental performance relative to peer firms in that industry), and internal
environmental initiatives (e.g., employee training in environmental management
issues). For each of the seven performance metrics, Clarkson and colleagues
(2007) proposed between 3 and 10 specific disclosure items that correspond
closely to the Global Reporting Initiative (GRI) sustainability reporting guide-
lines. In total, Clarkson et al.’s (2007) score is composed of 45 items. For our
study, we relied on the items from Clarkson et al.’s (2007) operationalization that
best predicted performance and attained a reasonable number of responses in
their sample. Our scoring system initially included 36 items: 6 items for gover-
nance structure and management systems, 14 items for credibility, 6 items for
environmental performance indicators, 1 item for environmental vision and strat-
egy claims, 4 items for environmental spending, and 3 items for internal environ-
mental initiatives.
Corporate self-disclosure scores on environmental matters are usually
derived from the content analysis of corporate documents such as annual
reports and corporate environmental reports (Abbott & Monsen, 1979; Clarkson
et al., 2007; Morhardt et al., 2002) and of corporate websites (Jose & Lee,
2007). In our data collection effort, we relied on data disclosed by companies
in their annual reports, social responsibility reports, or ECSR reports (when
available), and corporate websites. We also relied on information disclosed
on government websites such as those of the Environmental Protection Agency
(EPA). Two raters first assessed ECSR characteristics of the electronics firms
in our sample by gathering data on each of the initial 36 items in our scoring
system. Upon initial comparison of the raters’ assessments, we dropped the
environmental vision and strategy claim item, environmental spending items,
and internal environmental initiative items, as the raters were unable to reach
noticeable agreement. Our final ECSR measure comprised 26 items grouped
Post et al. 199
strengths in all areas, appears to have criterion validity (Sharfman, 1996) and
is a widely used measure in studies of corporate social responsibility. There
is some discussion, however, around the wisdom of the additive method (sub-
tracting sum of concerns from sum of strengths). Those in favor of the addi-
tive method note that firms may develop strengths to compensate for concerns
(e.g., Deckop, Merriman, & Gupta, 2006). This logic, which assumes corpo-
rate social responsibility to be a unidimensional concept, suggests that KLD
environmental strengths and concerns should be combined to provide a holis-
tic picture of a firms’ social responsibility.
However, others argue that an aggregate KLD measure may be misleading
and could mask important differences among companies. KLD strengths and
concerns scores may reflect different types of social action rather than a con-
tinuum of social performance (Mattingly & Berman, 2006). In an empirical
test of KLD’s convergent validity, Mattingly and Berman showed that KLD
environmental strengths and concerns scores both loaded onto the same latent
factor and indicated that they are positively correlated, but they cautioned
that the use of the additive method in empirical research could mask different
or counteracting mechanisms through which positive and negative social action
affect firm outcomes. Empirical evidence suggests that signals of social
responsibility concerns (e.g., a firm’s removal from a social index such as the
Calvert) are associated with poorer financial performance, whereas signals of
social responsibility strengths (firm endorsement by a social index) do not
seem to affect financial performance (Doh, Howton, Howton, & Siegel, 2010).
More specifically related to ECSR, Chatterji, Levine, and Toffel (2009)
showed that KLD environmental concerns, but not strengths, were associated
with pollution and regulatory compliance violations.
Overall our measure of ECSR is strongly correlated with KLD strength (r =
.72, p < .01), but not significantly correlated with KLD strengths-concerns (r =
.21, ns). This circumstance is not unexpected in light of recent findings that sug-
gest that environmental strengths and concerns may be distinct constructs
(Chatterji et al., 2009; Mattingly & Berman, 2006). Our findings reinforce this
notion. It seems that our Overall ECSR measure effectively captures environ-
mental strengths, but not the composite metric of environmental strengths minus
concerns. In effect, the contrasting correlations offer some evidence of conver-
gent validity (because of strong correlations with KLD strength) and discrimi-
nant validity (because of weak correlations with KLD strength-concern).
Whereas the studies cited above explore performance outcomes of KLD
strengths and concerns scores, in this study we evaluate antecedents of KLD
scores; that is, we analyze separately the relationships between board com-
position and KLD environmental strengths (i.e., positive social action), KLD
Post et al. 201
environmental concerns (i.e., negative social action), and the total KLD
environmental score. Hence, we use three KLD measures in our analyses:
(1) KLD strengths, the sum of the KLD ratings in the environmental strengths
areas; (2) KLD concerns, the sum of the KLD ratings in the environmental
concerns areas; and (3) Total KLD, the sum of environmental strengths from
which we subtract the sum of environmental concerns.
Board of Directors Composition. Using annual reports and Dun & Bradstreet,
we compiled the 2006 list of directors for the electronics-related firms and
the 2007 list for the chemicals firms for the boards in our sample. In our
sample, the total number of directors is 742. The insider/outsider status of
directors was obtained through the Company Insight Center of Business Week
Online. We collected data about directors’ gender, age, and education (i.e.,
degree attained and place of education) using Dun & Bradstreet, Reuters, and
Lexus Nexus Academic. Corporate websites were perused for any informa-
tion the reference materials could not supply.
Insider/outsider status. Among the boards in our study, the number of out-
side directors as percentage of the board size ranges from 14% to 90%, with
an average of 59%.
Gender. We found gender information for 100% of the directors in our
sample. On average, the firms in our sample had 1.2 female directors. Seven
firms (9%) had three or more women on their board.
Age. We were successful in collecting age data for 98% of the directors.
The average board age for the firms in our sample ranges from 42 to 71, with
a mean of 61. To test our hypothesis about the curvilinear effect of age, we
computed the square age term by multiplying mean age by itself.
Western European education. We were successful in collecting education
location data for 87% of the directors. For each board, we computed the per-
centage of directors with Western European education. Among the 78 compa-
nies in our sample, 32 boards (41%) had at least one director who was educated
in Western Europe. Among those 32 boards, the proportion of directors with a
Western European education ranges from 8% to 29%, with an average of 15%.
Educational attainment. We were successful in collecting degree attainment
data for 83% of the directors. The proportion of directors with advanced
degrees (i.e., MA, MS, MBA, JD, or PhD) among the boards in our sample
ranged from 0 to 100%, with an average of 67%.
Control Variables. We control for industry with a dummy variable (0 = elec-
tronics, 1 = chemicals) because of the differences in industry structure, under-
lying technologies, and environmental issues between the two industries
represented in our sample. For example, the American Chemistry Council
was the first trade association in the United States to initiate self-regulation in
202 Business & Society 50(1)
environmental matters (Lenox & Nash, 2003). We also control for slack
resources because the general assumption in extant research is that ECSR is
expensive and cannot directly maximize shareholder value (Rose, 2007).
Firms that have the requisite financial slack can more readily shoulder ECSR
expenses and investments. Using COMPUSTAT, we obtained, for each firm,
company financial slack data for the year prior to the year for which we col-
lected ECSR data. We computed slack as follows: Slack = (Cash + short-term
investments – current liabilities)/Net sales (Hambrick & D’Aveni, 1998).
We also control for CEO duality, because CEO duality is less prevalent in
socially responsible firms compared to nonsocially responsible firms (Webb,
2004). We computed CEO duality with data collected from the Company
Insight Center of Business Week Online and created a dummy variable
(0 = CEO is not chairman of board, 1 = CEO is chairman of board) that we
included in all of our analyses. Past research underscores that as boards get
larger they are hampered by escalating disorganization, while at the same
time they benefit from greater access to information and resources (Carpenter
& Westphal, 2001; Coffee & Wang, 1998; Hillman, Keim, & Luce, 2001;
Kassinis & Vafeas, 2002; Tuggle et al., 2010; Westphal & Fredrickson, 2001).
We control for board size, to account for either possibility.
Results
Table 1 lists the means, standard deviations, and Pearson correlation coeffi-
cients of the variables used in our analyses. As expected, the correlations
between the three ECSR disclosure measures and the total disclosed ECSR
score are all high, positive, and statistically significant. KLD strengths and
concerns are positively correlated, suggesting that firms with many concern
areas may attempt to offset them by engaging in positive environmental
social action. As one would also expect, the total KLD score is higher when
KLD strengths scores are high (r = .44, p ≤ .01) and lower when KLD con-
cerns scores are high (r = –.66, p ≤ .05). Because the KLD scores are derived
from information disclosed by firms, it is not surprising that our total dis-
closed ECSR scores are highly correlated with KLD strengths (r = .72,
p ≤ .01) and KLD concerns (r = .38, p ≤ .01). It is also noteworthy that total
disclosed ECSR scores are not correlated at a statistically significant level
with the total KLD score; this absence of association reinforces the notion
that environmental strengths and weaknesses are distinct constructs and
should not be combined.
Among the independent variables, only the proportion of outside directors
is highly correlated, and in the expected direction, with most of the dependent
Table 1. Means, Standard Deviations, and Pearson Correlation Coefficients
Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
203
204
Table 1. (continued)
Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
13. ECSR EPI 1.99 2.18 0.04 -0.16 -0.04 0.23* 0.33** 0.04 0.05 0.04 0.17 0.04 0.53** 0.73**
14. ECSR total 7.13 5.35 0.17 -0.19 -0.06 0.29** 0.39** 0.05 0.00 -0.01 0.19 0.04 0.71** 0.91** 0.90**
15. KLD strengths 0.67 1.02 0.07 -0.16 -0.06 0.23* 0.24* 0.15 -0.06 -0.07 0.17 -0.02 0.34** 0.75** 0.65** 0.72**
16. KLD concerns 0.91 1.22 0.62** -0.36** 0.05 0.20 0.15 0.14 0.05 0.05 0.03 -0.22 0.39** 0.34** 0.27* 0.38** 0.38**
17. KLD strengths- -0.24 1.26 -0.55** -0.21 00.10 0.00 0.05 -0.01 -0.10 -0.10 0.11 0.20 -0.10 0.27* 0.26* 0.21 0.44** -0.66*
concerns
Note: n = 78; ECSR = environmental corporate social responsibility; EPI = environmental performance indicators; KLD = Kinder Lydenberg Domini.
*p ≤ .05. **p ≤ .01.
Post et al. 205
variables. Industry, slack, and board size (but not CEO duality) are signifi-
cantly correlated with at least one of our dependent variables. Finally, we
note that boards in chemicals firms have a lower proportion of directors with
advanced degrees than boards in electronics firms (r = –.50, p < .01).
Table 2 displays the regression results for each dependent variable. The
controls and independent variables explain a statistically significant propor-
tion of the variance for all of our disclosed ECSR dependent variables. In
support of Hypothesis 1, boards with a high proportion of outside directors
display higher disclosed ECSR governance (b = 0.28, p ≤ .01), disclosed
ECSR credibility (b = 0.41, p ≤ .001), disclosed ECSR environmental perfor-
mance indicators (b = 0.41, p ≤ .001), total disclosed ECSR scores (b = 0.41,
p ≤ .001), and KLD environmental strengths scores (b = 0.30, p ≤ .05).
The presence of three or more female directors on a board is associated
with higher KLD strengths scores, in support of Hypothesis 2. However,
reaching this critical mass is not a statistically significant predictor of dis-
closed ECSR, in any form. Age is positively related (b = 2.80, p ≤ .05), and
age-square is negatively related (b = –2.80, p ≤ .05) to ECSR. Hence, the data
appear to contradict Hypothesis 3. Although the age effect is curvilinear, the
younger and older boards in our sample disclose less (not more) ECSR gov-
ernance. The depiction, in Figure 1, of the curvilinear relationship between
age and disclosed ECSR governance indicates that companies in our sample
have the highest disclosed ECSR governance when directors, on average, are
56 years of age.
We find some support for Hypothesis 4: Corporate boards with a higher
proportion of directors educated in Western Europe have higher disclosed
ECSR governance (b = 0.17, p ≤ .10). Our data do not support Hypothesis 5:
We found no statistically significant relationship between the proportion of
highly educated board members and firm ECSR.
Results for our industry control indicate large differences among the
chemicals and electronics firms such that chemicals firms disclose more
mechanisms of ECSR governance (b = 0.40, p ≤ .01), have higher scores of
KLD concerns (b = 0.60, p ≤ .001), and higher total KLD scores (b = –0.66,
p ≤ .001) than electronics firms. Contrary to expectations, firms with more
slack resources exhibit lower disclosed ECSR credibility (b = –0.22, p ≤ .10),
disclosed environmental performance indicators (b = –0.23, p ≤ .10), total
disclosed ECSR scores (b = –0.21, p ≤ .10), and KLD strengths scores (b = –0.22,
p ≤ .10) controlling for all other factors. CEO duality and board size are not
associated with any of the dependent variables in our analyses. In a two-
step hierarchical regression not shown here, we found that when board com-
position variables are not included in the analysis, board size is positively
Table 2. Regression of ECSR and KLD Variables on Board of Directors Diversity Information (Standardized Coefficients)
206
Disclosed Total
Disclosed Disclosed environmental disclosed KLD KLD
ECSR ECSR performance ECSR environmental environmental Total
governance credibility indicators score strengths concerns KLD
Control variables
Industry (1 = chemicals) 0.40*** 0.00 -0.11 0.06 -0.10 0.60**** 0.66****
Slack -0.05 -0.22* -0.23* -0.21* -0.22* -0.18 0.00
CEO duality (1 = CEO -0.08 -0.14 -0.09 -0.12 -0.12 -0.09 -0.01
is chairman)
Board size 0.17 0.14 0.15 0.18 0.13 -0.03 0.13
Board of directors
Outsider (%) 0.28*** 0.41**** 0.41**** 0.41**** 0.30** 0.11 0.13
Three or more female -0.03 0.12 0.08 0.08 0.21* 0.08 0.09
directors
Mean age of directors 2.80** 0.59 1.86 1.78 3.46 2.08 0.78
Mean age squared -2.80** -0.58 -1.77 -1.74 -3.50 -2.08 -0.82
Educated in Western 0.17* 0.11 0.14 0.16 0.15 0.03 0.10
Europe (%)
Masters degree or 0.15 0.09 0.13 0.09 0.00 0.12 -0.12
above (%)
Adj. R2 0.30**** 0.15** 0.16** 0 24**** 0.10* 0.35**** 0.26****
Note: n = 78; ECSR = environmental corporate social responsibility; KLD = Kinder Lydenberg Domini.
*p ≤ .10. **p ≤ .05. ***p ≤ .01. ****p ≤ .001.
Post et al. 207
2.00
1.50
1.00
0.50
0.00
40 45 50 55 60 65 70
Mean Age of Board Directors
Figure 1. Relationship between mean age of board directors and disclosed ECSR
governance
their boards. Because of the risk that our sample has insufficient power to
detect any real critical mass effect, future research should continue to exam-
ine this question. Another explanation for why having a critical mass of
female directors was not associated with higher ECSR is that gender role
orientation, more so than gender per se, may influence moral reasoning and
environmental attitudes (Elm et al., 2001; Kracher & Marble, 2008).
Informed by the research on age and generational differences in informa-
tion about, attitudes toward, and behaviors concerning environmental issues,
we anticipated a curvilinear relationship with ECSR, such that firms with
younger boards and firms with older boards would exhibit more ECSR.
We found that directors on boards with the highest ECSR were, on average,
56 years of age. When boards’ average age is lower or higher than 56 years
of age, disclosed ECSR governance scores dropped.3 One explanation for the
inconsistency between our results and our expectations is that our sample does
not contain a full age range, but is age-bounded, with the youngest and oldest
boards averaging 42 and 71 years, respectively.
The optimum average board age of 56 years for ECSR corresponds to some
historical analyses of the environmental movement. For example, the first Earth
Day demonstrations, which took place across the United States and abroad in
May 1970, are considered the turning point at which environmental issues were
introduced in educational curricula (Graham, 1999). The cohort of individuals
who were, on average, 56 years of age at the time of our study would have been
in college at the time of the first Earth Day celebrations, and cohort effects have
been shown to explain a nontrivial amount of variance in the growth of environ-
mental concern (Kanagy, Humphrey, & Firebaugh, 1994). Still, the limited age
range in our sample, which reflects the population in our study, prevents us from
drawing conclusions about long-term effects of the gradual replacement of older
board members with younger ones on firms’ ECSR.
Evidence from other studies about cultural differences in attitudes toward
ECSR (Mair, 2001; Vogel, 2003; Waldman et al., 2006) are corroborated in a
subset of our analyses. In particular, firms in our sample with a higher per-
centage of Western European educated directors report having more ECSR
governance mechanisms than those with less Western European representa-
tion. We evaluated the possibility that board composition, in terms of more
Western European educated directors, reflects the geographical reach of a
firm’s operation (i.e., larger share of firm sales in Europe). Using Hoovers
online, we collected regional sales data for each company in our sample and
computed the percentage of total sales that were made in Europe. We found
the correlation between the proportion of directors with Western European
210 Business & Society 50(1)
education and the proportion of sales in Europe to be very small and not sta-
tistically significant (r = .02, p = .873).
Finally, our findings do not corroborate prior work on the positive rela-
tionship between individuals’ educational attainment and the level of their
concerns for environmental issues (Elm et al., 2001; Rest & Narvaez, 1994).
Considering the strong industry difference in the proportion of directors with
higher education (i.e., boards in the electronics industry are much more likely
than those in chemicals firms to have a high proportion of directors with
advanced degrees), it is quite likely that the effect of the educational attain-
ment composition of boards is confounded with industry effects in our analy-
ses. In separate analyses of each industry, for example, we find that, among
electronics firms (and not among chemicals companies), boards with a higher
proportion of directors with advanced degrees also have higher disclosed
ECSR scores.
Overall, our analyses consistently show that as the proportion of outside
directors increases on boards, so do firms’ ECSR and KLD strengths scores.
In contrast to the importance of the structural characteristics of board
composition (proportion of outside directors), our findings regarding the
demographic composition of boards (in particular gender, age, and cultural
composition) are less reliable (i.e., lower statistical significance) and relate
to only one of the multiple ECSR measures used. Perhaps workplace social-
ization (Smith & Rogers, 2000), particularly socialization into a board of
directors, attenuates demographic differences in environmental attitudes.
Similarly, normative myopia, that is, the tendency of individuals to ignore,
suppress, or deny ethical values in decision making (Orlitzky, Swanson, &
Quartermaine, 2006; Swanson, 1999) may explain why demographic char-
acteristics of boards are weak predictors of ECSR, despite evidence of dif-
ferences across demographic groups in attitudes toward and information
about environmental issues. In contrast, differences among directors in infor-
mation about and attitudes toward environmental issues that stem from
directors’ relative position as insiders or outsiders may remain more salient
in board deliberations. Finally, one must consider the limitation of boards’
discretion in the face of institutional forces and of industry or organizational
shocks.
It is also noteworthy that when we evaluate the role of board composition
on environmental KLD strengths and concerns separately, we find that the
boards with a higher proportion of outsiders and those with three or more
female directors have more favorable KLD strengths scores, whereas none of
the board composition variables appears to be associated with KLD concerns
scores. Mattingly and Berman argued that the social activities captured by the
Post et al. 211
KLD can be categorized into different types of social action. They called for
more research on the antecedents and consequences of different types of
social action. This study suggests that board composition is an antecedent of
environmental strengths and not of environmental concerns; that is, directors’
information about and attitudes toward environmental issues may drive the
development of environmental strengths (e.g., developing beneficial prod-
ucts and services, recycling, etc.) but does not necessarily help mitigate envi-
ronmental concerns (e.g., hazardous waste, regulatory problems.) It may be
that firms require more time to address the environmental concerns measured
by the KLD than to take action in KLD strengths areas. Or it could be that
firms prioritize environmental strengths over concerns. Either way, our find-
ing that facets of board composition are positively associated with KLD
strengths, but not with KLD concerns, reinforces the cautionary note by sev-
eral researchers (Chatterji et al., 2009; Doh et al., 2010; Mattingly & Berman,
2006; Strike, Gao, & Bansal, 2006) about the additive method of combining
social responsibility strengths and concerns scores into one unidimensional
score and, in fact, about KLD’s construct validity more broadly (Orlitzky
& Swanson, 2008).
Contrary to expectations, firms with more slack resources exhibit lower
scores in disclosed ECSR credibility, disclosed environmental performance
indicators, total disclosed ECSR, and KLD environmental strengths net of all
other factors. This relationship could indicate the existence of priorities that
boards give to certain ECSR issues. Perhaps, from the firms’ perspective,
governance ECSR is the most readily achievable type of ECSR goal; thus,
this area is the first that firms tend to address when they have the funds and
decide to engage in ECSR activities. The potential prioritization of ECSR
issues is a topic that deserves future research attention.
CEO duality and board size are not associated with any of the dependent
variables in our analyses. In a two-step hierarchical regression not shown
here, we found that when board composition variables are not included in the
analysis, board size is positively (and with statistical significance) associated
with the ECSR governance and total ECSR scores. However, these relation-
ships lose statistical significance when the board composition variables are
entered into the regression as a second step. These results appear to support
the argument that having more directors provides boards with more informa-
tion about environmental issues (rather than the opposite argument that board
size leads to chaos and inaction) and that the information is conveyed by
outside directors.
Although we attempt in this article to provide a multifaceted picture of
the relationship between board composition (in terms of insider/outsider
212 Business & Society 50(1)
Appendix
A. Disclosed Governance
Item Data source(s)
B. Disclosed Credibility
Item Data source(s)
1 Does the company have an environmental Company website and Google
report (ER)?
2 If the company does not have an ER: Does CorporateRegister.Com: http://
the company have a corporate social www.corporateregister.com/
responsibility report (CSR) report?
3 If the company does not have an ER, but Corporate social responsibility
has a CSR: Does the CSR have a section on report
environmental responsibility?
4 Does the company adhere to GRI Environmental Report, Corporate
(Global Reporting Initiative) or CERES Social Responsibility Report,
(Coalition for Environmentally Responsible Annual Report, website
Economies) reporting guidelines?
5 Does company provide information about Environmental Report, Corporate
environmental audits? Social Responsibility Report,
Annual Report, website
6 Has the company submitted a GRI report http://www.globalreporting.org/
since January 2008? GRIReports/2008ReportsList/
7 Is the company a CERES member? http://www.ceres.org/
NETCOMMUNITY/Page.
aspx?pid=426&srcid=553#list
8 Does the company participate in an http://www.eicc.info/membership
industry-specific association to improve .html
environmental practices (Electronic http://www.americanchemistry
Industry Citizenship Coalition or American .com/s_acc/sec_directory
Chemistry Council)? .asp?CID=250&DID=616
9 Does the company participate in the http://www.epa.gov/climateleaders/
Climate Leader EPA partner government partners/index.html
initiative to improve environmental
practices?
10 Does the company participate in the http://www.epa.gov/chp/
Combined Heat and Power Partnerships partnership/partners.html
government initiative to improve
environmental practices?
11 Does the company participate in the http://www.energystar.gov/index
Energy Star government initiative to .cfm?fuseaction=estar_partner
improve environmental practices? _list.showPartnerResults&s
_code=ALL&partner_type_id
=ALL&cntry_code=
US&award_search= N&award
_category=ALL&award_year=
(continued)
Post et al. 215
Appendix B. (continued)
Item Data source(s)
ALL&letter=ALL¤t_sort
_column=NAME¤t_sort
_order=ASC&layout=default&sta
rtnum=1&resultsperpage=14433
12 Does the company participate in the EPA http://www.epa.gov/greenpower/
Green Power Partnership government partners/index.htm
initiative to improve environmental practices?
13 Does the company participate in National http://www.epa.gov/epaoswer/
Partnership for Environmental Priorities hazwaste/minimize/npep/partners
(NPEP) government initiative to improve .htm
environmental practices?
14 Does the company participate in the http://wastewise.tms.icfi.com/
Wastewise government initiative to wisesearch/results.asp
improve environmental practices?
Acknowledgment
We thank Jill Brown and Daniel Tinkelman for their informal review of the manu-
script. We are also grateful to our anonymous reviewers for their valuable questions
and suggestions. An earlier version of this article was presented at the 2009 meeting
216 Business & Society 50(1)
Funding
The author(s) received no financial support for the research and/or authorship of this
article.
Notes
1. KLD is a proprietary data set issued by Kinder, Lydenberg, Domini, Inc. that
provides annual environmental, social, and governance ratings of more than 3,000
publicly traded companies through the KLD STATS database.
2. Because the Credibility score is the sum of 14 items and the governance and EPI
scores each are the sum of 6 items, credibility scores may put an undue weight
on the total disclosed ECSR score. To ascertain this possibility, we computed a
weighted sum of the three scores. Using the weighted score as our dependent vari-
able does not alter the pattern of results presented here.
3. In separate analyses we used a median instead of mean age, and we controlled, for
each board, for the standard deviation in age among all directors. In both cases,
the pattern of our results was identical.
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Bios
Corinne Post is Assistant Professor of Management in the College of Business and
Economics, at Lehigh University. She received her PhD in Organization Management
from Rutgers Business School – Newark and New Brunswick. Her research interests
center around diversity management, notably on mechanisms underlying gender/
racial/ethnic differences in careers and on the role of diversity as enabler or impedi-
ment to group performance.
Emily Rubow received her BBA from the Lubin School of Business at Pace
University. Her research interests include environmental sustainability and factors
contributing to the environmentally responsible behaviors of consumers.