Received: 21 January 2019 Revised: 9 May 2019 Accepted: 27 May 2019

DOI: 10.1002/bse.2354

RESEARCH ARTICLE

Do board sustainability committees contribute to corporate

environmental and social performance? The mediating role of
corporate social responsibility strategy

Nurlan Orazalin

Bang College of Business, KIMEP University,

Almaty, Kazakhstan
Correspondence
Nurlan Orazalin, Bang College of Business,
KIMEP University, 2 Abai Avenue, office 346,
050000, ext. 2183, Almaty, Kazakhstan.
Email: orazalin@kimep.kz
Abstract
The purpose of this study is to investigate the impact of board sustainability commit-
tees on environmental and social performance and to examine the mediating effect of
corporate social responsibility (CSR) strategy on the relationship between the pres-
ence of board sustainability committees and corporate sustainability performance.
Using data of U.K. listed firms for the period of 2009–2016, the study employs panel
regression analysis and bootstrapping techniques to test study hypotheses. The
results suggest that the presence of a sustainability committee improves the effective-
ness of CSR strategies. The results also indicate that firms with effective CSR strate-
gies exhibit better environmental and social performance. Further, the empirical
results show that the effectiveness of CSR strategy explains the positive relationship
between board sustainability committees and corporate environmental and social per-
formance, thus supporting the theoretical framework of the study. The findings of the
study shed new light on this research direction and could be of interest to board mem-
bers, managers, practitioners, investors, policy makers, and regulators that plan to pro-
mote sustainability practices and strategies needed for sustainable development.

K E Y W OR D S

board sustainability committees, corporate social responsibility strategy, environmental

governance, environmental performance, social performance, sustainable development

1 | I N T RO D U CT I O N 2018; Walls, Berrone, & Phan, 2012). Consequently, research in the

In recent years, the sustainability implications of corporate environ-
mental and social activities have led to growing demands on modern
business organizations to promote sustainability and CSR strategies
that are essential for sustainable development and growth as well as
gaining competitive advantage in the market (Alberici & Querci,
2016; Arda, Bayraktar, & Tatoglu, 2019; Arena, Bozzolan, & Michelon,
2015; Shaukat, Qiu, & Trojanowski, 2016). Recent corporate gover-
nance and CSR discussions have shifted toward contemporary envi-
ronmental and social issues to explain how business organizations
are governed and what kind of corporate governance mechanisms
positively affect corporate social behavior (Hussain, Rigoni, & Orij,
field of corporate governance, CSR, and sustainability issues has
gained increased attention among scholars, practitioners, and policy
makers. Specifically, a number of recent studies have examined the
importance of corporate boards in developing CSR initiatives and
practices that affect overall sustainability performance (Biswas, Mansi,
& Pandey, 2018; de Villiers, Naiker, & van Staden, 2011; Haque, 2017;
Haque & Ntim, 2018; Hussain et al., 2018; Post, Rahman, &
McQuillen, 2015; Shaukat et al., 2016; Walls et al., 2012). In addition,
other studies have provided evidence that unique human resources,
strong managerial capabilities, and effective sustainability strategies
enable firms to develop CSR practices which in turn lead to superior
corporate environmental and social performance (Al‐Tuwaijri,

Bus Strat Env. 2019;1–14. wileyonlinelibrary.com/journal/bse © 2019 John Wiley & Sons, Ltd and ERP Environment 1
2 ORAZALIN
Christensen, & Hughes, 2004; Clarkson, Li, Richardson, & Vasvari,
2011; Russo & Fouts, 1997; Walker, Ni, & Dyck, 2015). However,
despite the extensive literature on corporate governance and sustain-
ability performance, relatively limited attention has been given to
understanding the impacts of specialized board sustainability com-
mittees and CSR strategies on corporate environmental and social out-
comes (Biswas et al., 2018; Burke, Hoitash, & Hoitash, 2019; Helfaya &
Moussa, 2017). As argued by Dixon‐Fowler, Ellstrand, and Johnson
(2017), there is a need to study the importance of board sustainability
committees to better understand corporate governance mechanisms.
Prior studies examining the effects of board‐level sustainability
committees on corporate sustainability performance have been limited
and provided inconclusive results (Berrone & Gomez‐Mejia, 2009;
Biswas et al., 2018; Burke et al., 2019; Dixon‐Fowler et al., 2017;
Mallin & Michelon, 2011; Rodrigue, Magnan, & Cho, 2013; Walls
et al., 2012). For example, Berrone and Gomez‐Mejia (2009) and
Rodrigue et al. (2013) find no association between sustainability com-
mittees and environmental performance. Biswas et al. (2018) and
Walls et al. (2012), on the other hand, provide evidence that the
creation of specialized sustainability committees leads to superior
sustainability performance. However, most of these studies have exam-
ined the direct effects of board sustainability committees on corporate
sustainability performance. As argued by Post et al. (2015) and Shaukat
et al. (2016), there is a need to study the mechanisms through which
corporate governance practices might be positively related to sustain-
ability performance. Therefore, this study aims to examine the mediat-
ing effect of CSR strategies on the relationship between sustainability
committees and corporate sustainability performance.
Previous research argues that business organizations are increas-
ingly motivated to integrate sustainability issues into their strategies
rather than to merely follow regulatory requirements (Aragón‐Correa
& Rubio‐López, 2007; Bhupendra & Sangle, 2015; Phan & Baird,
2015; Sharma & Vredenburg, 1998; Wijethilake, 2017). More specifi-
cally, modern entities that integrate sustainability practices and policies
into their core values manage sustainability risks more effectively
(Wijethilake & Lama, 2018). In this regard, corporate boards play a
crucial role in shaping effective CSR strategies in order to improve
corporate environmental and social performance (Biswas et al., 2018;
Hussain et al., 2018; Shaukat et al., 2016). One way corporate boards
may develop corporate sustainability strategies and policies is by
establishing specialized committees to address environmental issues
and to promote sustainability. (Kassinis & Vafeas, 2002). However,
prior studies have provided limited evidence on whether effective
sustainability‐related strategies lead to better sustainability perfor-
mance (Aguinis & Glavas, 2012; Halme & Laurila, 2009; Halme,
Rintamäki, Knudsen, Lankoski, & Kuisma, 2018; Wang, Tong, Takeuchi,
& George, 2016). Considering this research gap, the present study
specifically evaluates how board sustainability committees affect cor-
porate environmental and social performance through CSR strategy.
The present study offers three distinct contributions to the extant
literature. First, it contributes to the corporate governance literature
by conceptually and empirically testing whether board sustainability
committees improve the effectiveness of sustainability‐related
strategies. To date, prior studies have examined the direct effect of
specific sustainability committees on environmental and social perfor-
mance (e.g., Biswas et al., 2018; Hussain et al., 2018; Mallin &
Michelon, 2011). This study provides empirical evidence on the
relationship between board sustainability committees and CSR strat-
egy because the effectiveness of CSR strategies is a more proximal
outcome of sustainability committees than environmental and social
performance outcomes. Second, the study contributes to the sustain-
ability literature by recognizing the importance of CSR strategies in
integrating social and environmental aspects of sustainability into
decision‐making processes to affect environmental and social perfor-
mance. Last, the study adds to the literature by providing evidence
whether board sustainability committees affect corporate environ-
mental and social performance through CSR strategies. Despite con-
siderable research on the relationship between board sustainability
committees and corporate environmental and social performance
(e.g., Dixon‐Fowler et al., 2017; Haque, 2017; Walls et al., 2012), there
is little evidence of specific mechanisms linking board governance with
sustainability performance (Post et al., 2015; Tuggle, Schnatterly, &
Johnson, 2010). Therefore, this study specifically evaluates the medi-
ating role of CSR strategy in the relationship between board commit-
tees and corporate environmental and social performance.
The rest of this paper is organized as follows. Section 2 introduces
the theoretical approach, reviews relevant literature, and develops
hypotheses. Section 3 presents data and research methodology.
Section 4 reports the empirical results and discussion of the findings.
Finally, Section 5 concludes the paper.
2 | THEORETICAL BACKGROUND,
LITERATURE REVIEW, AND HYPOTHESIS
DEVELOPMENT
In recent decades, corporate governance research has substantially
increased due to the broadening scope of corporate governance
and CSR practices that address sustainability issues not only to
shareholders but also to other stakeholders (Rodrigue et al., 2013;
Shaukat et al., 2016). Most of these studies (e.g., Barako, Hancock,
& Izan, 2006; Giannarakis, 2014; Michelon & Parbonetti, 2012;
Shaukat et al., 2016) have relied on a single theory perspective, such
as agency, stakeholder, resource dependency, legitimacy, upper ech-
elons, institutional, or impression management theories to investigate
the relationships between corporate governance mechanisms and
sustainability performance. In contrast, the present study adopts a
multitheoretical perspective (including resource dependency, stake-
holder, and upper echelons theories) to evaluate how board sustain-
ability committees affect corporate environmental and social
performance through CSR strategy.
According to the resource dependency theory, strategic resources
that directors on boards bring to the organization include information,
knowledge, experience, skills, networks, key constitutes (e.g., cus-
tomers, social groups, suppliers, policy decision makers, and experts),
and values (Hillman, Cannella, & Paetzold, 2000; Kesner & Johnson,
ORAZALIN 3

1990; Pfeffer & Salancik, 2003). From the resource dependency theories to provide more insight into the impact of board sustainability
perspective, Hillman and Dalziel (2003) suggest that the important committees on corporate environmental and social performance
contributions of the board are formulating corporate strategy, provid- though CSR strategies.
ing advice and expertise, improving legitimacy and corporate image,
facilitating access to resources, improving strategic decision making,
and building external relations with all stakeholders. Moreover, the
2.1 | The role of board sustainability committees on
resource dependence theory views the board of directors as a
corporate environmental and social performance
resource for managing and controlling a firm's environmental concerns
The presence of a sustainability committee, as one of the important
(Pfeffer & Salancik, 1978). In this regard, the resource dependency
board governance mechanisms, has been debated in recent studies,
theory has been used in recent empirical studies to explain the role
especially in relation to sustainability performance (Haque, 2017;
of corporate boards in achieving sustainable development (e.g., Post
Hussain et al., 2018). The establishment of sustainability committees
et al., 2015; Shaukat et al., 2016)
improves corporate governance which in turn leads to better firm
The stakeholder theory of management postulates that CSR
performance (Liu & Zhang, 2017). Using data from Business in the
improves firm value by balancing the interests of multiple stake-
Environment Index, Spitzeck (2009) reports that the presence of a
holders, including investors, managers, employees, customers, sup-
CSR sustainability committee has a positive impact on corporate
pliers, regulators, and communities (Freeman, 1984). The stakeholder
social performance. Similarly, Mallin and Michelon (2011) find a
theory also addresses environmental and sustainability issues and
positive association between the presence of a sustainability com-
focuses on business organizations and their stakeholders who are
mittee and social performance for the U.S. market. Biswas et al.
affected by these environmental and sustainability issues (Deegan,
(2018) provide evidence that firms with sustainability committees
2014; Godfrey, Merrill, & Hansen, 2009). From the stakeholder theory
have better environmental and social performance in the context of
perspective, Michelon and Parbonetti (2012) argue that enhanced
Australia. Using data of S&P 500 firms, Dixon‐Fowler et al. (2017)
corporate governance mechanisms improve firm‐stakeholder relation-
find a positive relationship between board environmental committees
ships by fostering sustainability practices. In this regard, the stake-
and corporate environmental performance. However, Berrone and
holder theory supports the improvement of corporate governance
Gomez‐Mejia (2009) find no association between the presence of
mechanisms, the implementation of sustainability activities, and the
environmental committees and environmental performance based
promotion of CSR strategies to manage conflicting interests of differ-
on data from U.S. firms. Based on the theoretical arguments and
ent stakeholders.
the empirical findings of prior studies, it is assumed that the
According to the upper echelons theory (Hambrick, 2007; Hambrick
presence of a sustainability committee leads to better corporate
& Mason, 1984), strategic decisions made by top managers determine
environmental and social performance. Thus, the following hypothe-
competitive strategies which in turn affect firm performance. From
ses are developed:
the upper echelons theory perspective, the board of directors is an
important predictor of corporate strategic decision making (Forbes & H1a. The presence of a sustainability committee is
Milliken, 1999). In this regard, the echelons theory argues that positively related to corporate environmental
directors' views and decisions reflect their knowledge, skills, values, performance.
and experience (Hambrick, 2007). The upper echelons theory also
H1b. The presence of a sustainability committee is
posits that better organizational results are achieved when senior
positively related to corporate social performance.
executives, managers, and directors are working closely as a team.
These team members with their specific skills, expertise, and character-
istics may affect firms' strategic choices and consequently improve firm 2.2 | Board sustainability committees and CSR
performance in terms of profits, growth, and sustainability (Shahab, strategy
Ntim, Chengang, Ullah, & Fosu, 2018). From the upper echelons theory,
Post et al. (2015) provide evidence that improved board characteristics From the stakeholder theory perspective, the establishment of a sus-
enhance corporate environmental performance through effective tainability committee indicates a firm's orientation and commitment
sustainability‐related strategic actions. towards CSR activities and sustainability‐related issues (Amran, Lee,
Prior empirical studies examining the relationship between corpo- & Devi, 2014; Biswas et al., 2018; Hussain et al., 2018). As noted by
rate governance and sustainability performance have used more than Liao, Luo, and Tang (2015), boards environmental committees help
one theory (de Villiers et al., 2011; Dixon‐Fowler et al., 2017; Hussain business organizations to systematically plan, organize, implement,
et al., 2018; Mahmood & Orazalin, 2017; Post et al., 2015). Hussain and control corporate sustainability policies. Specialized board commit-
et al. (2018) and Shahab et al. (2018) argue that one theory may not tees may substantially influence a firm's strategies and policies
fully explain the interrelationships between corporate governance (Peterson, Philpot, & O'Shaughnessy, 2007). This is consistent with
mechanisms and sustainability performance due to growing complexi- the view that the presence of CSR committees plays a central role
ties in this relationship and conflicting interests of all stakeholders. in formulating CSR strategies and reviewing CSR performance
Hence, this study uses these three overlapping and complementing (Mackenzie, 2007). Spira and Bender (2004) suggest that the
4 ORAZALIN
formation of board committees is one of the important tools for
improving corporate governance practices. Based on the theoretical
framework and the discussion above, it is assumed that board sus-
tainability committees improve the effectiveness of CSR strategies.
Hence, the following hypothesis is proposed:
H2. The presence of a sustainability committee is
likely to have a positive impact on CSR strategy.
2.3 | The role of CSR strategy on corporate
environmental and social performance
According to the CSR literature (e.g., Helfaya & Moussa, 2017;
Mårtensson & Westerberg, 2016), effective CSR strategies enhance
organization outcomes. Consistent with this view, Clarkson et al.
(2011) suggest that, to achieve long‐term goals and objectives, firms
should adopt proactive strategies for controlling environmental issues.
Post et al. (2015) conclude that sustainability‐themed strategic actions
lead to superior environmental performance of oil and gas companies
in the United States. Using data of U.K. listed companies, Shaukat
et al. (2016) provide evidence that firms with effective and compre-
hensive CSR strategies achieve superior corporate environmental
and social performance. Similarly, Wijethilake (2017) finds a positive
relationship between a proactive CSR strategy and corporate sus-
tainability performance in the context of Sri Lanka. Helfaya and
Moussa (2017) document that effective CSR strategy has a positive
impact on environmental sustainability disclosures of U.K. listed
firms. Other studies also reveal that proactive sustainability and
CSR strategies are positively associated with corporate sustainability
performance (e.g. Aragón‐Correa, Hurtado‐Torres, Sharma, & García‐
Morales, 2008; Banerjee, 2001; Christmann, 2000; Judge & Douglas,
1998; Klassen & Whybark, 1999). Based on the theoretical develop-
ment and the findings of prior studies, it is assumed that the effective-
ness of CSR strategies will lead to better corporate environmental
and social performance. Accordingly, the following hypotheses are
constructed:
H3a. CSR strategy is likely to have a positive impact
on corporate environmental performance.
H3b. CSR strategy is likely to have a positive impact
on corporate social performance.
2.4 |Board sustainability committees, CSR strategy,
and corporate environmental and social performance
According to Fraj‐Andrés, Martínez‐Salinas, and Matute‐Vallejo
(2009), management commitment is an important underlying
factor affecting corporate environmental orientation and strategy.
Consistent with this view, Mackenzie (2007) argue that specialized
board committees are responsible for setting CSR strategies and
overseeing their implementation for sustainable development and
growth. Shaukat et al. (2016) provide evidence that board gover-
nance mechanisms develop an effective CSR strategy which in turn
leads to superior environmental and social performance in the con-
text of U.K. firms. Biswas et al. (2018) conclude that the
presence of sustainability committees helps firms design CSR strate-
gies to enhance their environmental and social performance in
the case of Australia. Although prior studies have documented
positive links between board sustainability committees and
corporate sustainability performance, this study suggests that the
formation of a sustainability committee leads to better corporate
environmental and social performance through effective CSR strate-
gies. Based on the theoretical framework and the discussion of
prior studies, it assumed that board sustainability committees
improve corporate environmental and social performance through
effective CSR strategies. Therefore, the following hypotheses are
developed:
H4a. CSR strategy mediates the positive relationship
between the presence of a sustainability committee
and corporate environmental performance.
H4b. CSR strategy mediates the positive relationship
between the presence of a sustainability committee
and corporate social performance.
3 | D A T A A N D M E T H O D O LO G Y
3.1 | Sample and data collection
The initial sample of the study is based on 2,120 firm‐year ob-
servations from U.K. firms operating in 14 different industries with
data coverage from the Thomson Reuters Asset4 from 2009 to
2016. Data on board governance and sustainability performance
were collected from the Thomson Reuters Asset4 database, whereas
financial data were extracted from the Worldscope database. Finan-
cial institutions including commercial banks and insurance companies
are not analyzed in this study due to their specific governance prac-
tices and regulatory requirements. Next, 748 firm‐year observations
with missing data on environmental and social performance indica-
tors in the Asset4 database were removed from the sample. Then,
348 firm‐year observations for firms with insufficient data on
corporate governance variables were deleted reducing the sample
to 1,024 firm‐year observations. Finally, 187 firm‐year observations
without financial data were eliminated from the sample. Although
the Asset4 database dates back to 2002, it does not have all data
on CSR strategy and sustainability performance variables for most
firms from 2002 to 2008. Because data on the main study variables
are available for the majority of firms from 2009, the study analyzes
an unbalanced dataset from 2009 onwards. Therefore, the final
sample contains 837 firm‐year observations from 109 firms, operat-
ing in 10 industries from 2009 to 2016. Table 1 displays the
sample distribution across industries. The industrials, consumer dis-
cretionary, and real estate industries have the most observations,
accounting for 22.80%, 22.50%, and 17.60% of the total sample,
respectively.
ORAZALIN 5

TABLE 1 Sample distribution by industry platform for assessing systematic environmental and social perfor-
mance indicators for publicly traded companies. The Asset4 is a global
Industry Freq. Percent Cumul.
leading database, which is widely used not only by practitioners and
Consumer Discretionary 188 22.50 22.50
investors to evaluate corporate sustainability practices but also by
Consumer Staples 80 9.60 32.00 scholars to conduct research related to sustainability (Escrig‐Olmedo,
Energy 8 1.00 33.00 Muñoz‐Torres, Fernández‐Izquierdo, & Rivera‐Lirio, 2017; Ioannou &
Health Care 34 4.10 37.00 Serafeim, 2012). To measure the overall environmental score for each
Industrials 191 22.80 59.90 firm, individual dimension scores are aggregated into the total

Information Technology 56 6.70 66.50 environmental performance score. There are three individual dimen-
sions that measure the level of environmental performance. These
Materials 85 10.20 76.70
dimensions are resource use, emissions reduction, and environmental
Real Estate 147 17.60 94.30
innovation. The aggregate measure of environmental performance is
Telecommunication 16 1.90 96.20
constructed based on the weights of individual dimensions in
Utilities 32 3.80 100.00 accordance with the Asset4 database. The total score is expressed in
Total 837 100.00 percentages and ranges between 0% and 100%. Similarly, the level
of social performance is measured based on four individual dimensions
3.2 | Measures provided by the Asset4 database. These dimensions are workforce,
human rights, community, and product responsibility. The overall
3.2.1 | Dependent variable social performance is constructed based on the weights of individual
dimensions in accordance with the Asset4 database. The total score
To measure the presence of sustainability committee, the study uses is expressed in percentages and ranges between 0% and 100%.
data obtained from the Thomson Reuters Asset4 database. Specifi-
cally, firms are assigned a binary value of one if the board has a sus-
3.2.4 | Control variables
tainability committee; otherwise, firms are coded zero if the board
does not have such committees. This measurement approach is con- Consistent with prior studies (e.g., Clarkson, Li, Richardson, & Vasvari,
sistent with a proxy for specialized board committees used by Biswas 2008; de Villiers et al., 2011; Orazalin & Mahmood, 2018; Shaukat
et al. (2018), Dixon‐Fowler et al. (2017), and Helfaya and Moussa et al., 2016; Walls et al., 2012), the study includes a number of control
(2017) to indicate that the board of directors has special committees variables to account for potentially confounding effects of various firm
responsible for sustainability and CSR issues. characteristics that may affect CSR strategy and corporate environ-
mental and social performance. In particular, firm profitability (ROA)
3.2.2 | Mediator is controlled because more profitable firms are likely to pursue proac-
tive sustainability strategies and exhibit better sustainability perfor-
Consistent with prior studies (e.g., Helfaya & Moussa, 2017; Qiu, mance (Artiach, Lee, Nelson, & Walker, 2010; Mallin, Michelon, &
Shaukat, & Tharyan, 2016; Shaukat et al., 2016), the study measures Raggi, 2013; McKendall, Sánchez, & Sicilian, 1999). Profitability is
CSR strategy using a CSR strategy index obtained from the Asset4 measured as the firm's return on assets, following Biswas et al.
database which reflects a firm's CSR practices toward a comprehensive (2018). Firm size (SIZE) is included in the analysis because larger firms
vision and strategy integrating the economic, social, and environmental are more sensitive to sustainability issues (Sharma, 2000), have better
aspects into its day‐to‐day decision‐making processes. To capture a CSR activities (Reverte, Gómez‐Melero, & Cegarra‐Navarro, 2016;
firm's CSR policies and strategies, the database develops a CSR strategy Udayasankar, 2008), and exhibit superior sustainability performance
index based on measures such as complying with GRI guidelines, (Artiach et al., 2010). Firm size is measured as the natural logarithm
reporting CSR‐related activities, having an external audit of CSR of the firm's total assets in accordance with Lourenço and Branco
reports, integrating a firm's financial and extra‐financial reports, and (2013). Leverage (LEV) is controlled because firms with low debt are
establishing CSR committees. It is reasonable to conclude that the more likely to have more flexibility to invest in environmental and social
effective strategies and policies a firm adopts, the more proactive and activities (Ziegler & Schröder, 2010). Leverage is measured as total
comprehensive is its CSR strategy (Shaukat et al., 2016). The total score debt over total assets in accordance with Walls et al. (2012). Financial
is expressed in percentages and ranges between 0% and 100%. capacity (FCFTA) is included in the analysis as a control variable
because firms with greater financial resources tend to invest in CSR
3.2.3 | Independent variables activities (Clarkson et al., 2011; Helfaya & Moussa, 2017) and exhibit
better sustainability performance (Lourenço, Branco, Curto, &
Consistent with prior studies (e.g., Garcia, Mendes‐Da‐Silva, & Orsato, Eugénio, 2012). Financial capacity is measured as the ratio of free cash
2017; Haque & Ntim, 2018; Shaukat et al., 2016), the study measures flows to total assets, following Orazalin and Mahmood (2018). Finally,
environmental and social performance with scores collected from the capital intensity is controlled because firms with higher capital inten-
Thomson Reuters Asset4 database, which provides a comprehensive sity are likely to use clean and energy efficient technologies, which
6 ORAZALIN

in turn improve energy efficiency and lead to better sustainability Model 3.

performance (de Villiers et al., 2011; Luo, Lan, & Tang, 2012). Capital
ENVNit or SOCLit ¼ α0 þ β1 CSRSGYit
intensity is measured as the ratio of fixed assets to total sales, follow-
þ β2 BSCOMMit þ β3 SIZEit
ing (Datta, Guthrie, & Wright, 2005).
þ β4 ROAit þ β5 LEVit
þ β6 FCFTAit þ β7 CAPINTit þ ŋi þ εit ;
3.3 | Research methodology

In order to examine how board sustainability committees affect corpo-

where, ENVNit is environmental performance of a firm i at time t; SOCLit
rate environmental and social performance through CSR strategy, this
is social performance of a firm i at time t; BSCOMMit is CSR sustainabil-
study follows Baron and Kenny (1986), who argue that a variable serves
ity committee; CSRSGYit is CSR strategy; SIZEit is firm size; ROAit is
as a mediator if it meets three vital conditions. In particular, first, the
return on assets ratio; LEVit is firm leverage; FCFTA it is financial capac-
independent variable (board sustainability committees) should signifi-
ity; CAPINT it is capital intensity; ŋi is the unobserved heterogeneity
cantly affect the dependent variable (environmental performance and
(unobserved individual firm effects); and εit is the specific error term.
social performance). Second, the independent variable should signifi-
Detailed definitions of research variables are summarized in Table 2.
cantly affect the mediator variable (CSR strategy). Finally, when both
The Hausman test is performed to determine whether the fixed‐
the independent and mediator variables are included in a model, the
effects (FE) or random‐effects (RE) models are appropriate for this
value of the mediator variable should be significant, but the value of
study. The reported results from the Hausman test show that the dif-
the independent variable should be reduced. Thus, the following panel
ferences between FE and RE coefficients are statistically significant,
regression models are employed to test study hypotheses and examine
thus indicating that FE models are more appropriate for this study.
the effects of board sustainability committees on corporate environ-
The obtained results from the Hausman test are summarized inTables 6
mental and social performance through CSR strategy:
and 7.
Model 1.

ENVNit or SOCLit ¼ α0 þ β1 BSCOMMit þ β2 SIZEit

þ β3 ROAit þ β4 LEVit 4 | F I N D I N G S , A N A LY S I S , A N D D I S C U S S I O N
þ β5 FCFTAit þ β6 CAPINTit þ ŋi
þ εit ; Table 3 presents descriptive statistics of environmental performance,
social performance, and CSR strategy and shows differences in means
Model 2.
of these variables between boards with sustainability committees and
CSRSGYit ¼ α0 þ β1 BSCOMMit þ β2 SIZEit boards without sustainability committees. The mean value of ENVN is
þ β3 ROAit þ β4 LEVit þ β5 FCFTAit 71.84% for boards with sustainability committees, compared with
þ β6 CAPINTit þ ŋi þ εit ; 50.50% for boards without sustainability committees. The mean

TABLE 2 Definitions of research variables

Variables Acronyms Definition

Environmental ENVN Environmental performance score is constructed based on individual performance dimensions including resource
performance use, emissions, and innovation and is measured in accordance with the Asset4 database. The total score is
expressed in percentages and ranges between 0% and 100%
Social performance SOCL Social performance score is constructed based on individual performance dimensions including workforce, human
rights, community, and product responsibility and is measured in accordance with the Asset4 database. The total
score is expressed in percentages and ranges between 0% and 100%
CSR strategy CSRSGY CSR strategy score is measured in accordance with the Asset4 database and reflects a firm's CSR practices toward a
comprehensive vision and strategy integrating the economic, social and environmental aspects into its day‐to‐day
decision‐making processes.
Board sustainability BSCOMM A dummy variable that takes a value of 1 if the firm has a board sustainability committee and 0 otherwise
committee
Firm size SIZE The natural logarithm of total assets of the firm
Firm profitability ROA Net earnings divided by total assets of the firm
Leverage LEV Total debt divided by total assets of the firm
Financial capacity FCFTA Free cash flows divided by total assets of the firm
Capital intensity CAPINT Fixed assets divided by total sales of the firm
ORAZALIN 7

TABLE 3 Descriptive statistics of environmental performance, social positively correlated with ENVN and SOCL variables. Similarly,
performance, and CSR strategy by the presence or absence of sus- BSCOMM and SIZE are positively correlated with CSRSGY at the 1%
tainability committees significance level. Serious multicollinearity issues arise if a correlation
ENVN SOCL CSRSGY between independent variables exceeds a threshold value of 0.700
(Pallant, 2007). The reported correlations among explanatory variables
Boards with sustainability Mean 71.84 69.97 70.16
committees Std. Dev. 15.32 16.04 20.40 indicate the absence of potential multicollinearity issues in the analysis.

Boards without sustainability Mean 50.50 50.90 23.28

Table 6 presents FE regression coefficients estimated based on
committees Std. Dev. 16.44 16.26 16.79 robust standard errors corrected for autocorrelation and
Difference in means (t‐test) 14.30*** 12.80*** 29.24*** heteroscedasticity. Specifically, Columns Model 1 and Model 3 report
estimated results with ENVN as the dependent variable whereas Col-
Total Mean 68.19 66.71 62.15
Std. Dev. 17.46 17.60 26.54 umn Model 2 reports estimated results with CSRSGY as the depen-
dent variable. The reported results from Model 1 indicate that
Note. The reported t test results compare the means under the equal var-
iances assumption.
BSCOMM is significant and positively associated with ENVN
(β = 5.860, p < .001), thus supporting Hypothesis 1. This evidence is
Abbreviations: CSRSGY, CSR strategy; ENVN, environmental performance;
SOCL, social performance. in line with the findings of Biswas et al. (2018) and Dixon‐Fowler
***Significant at 1% level. et al. (2017) that the presence of a sustainability committee leads to
superior environmental performance. Similarly, Column Model 2
values of SOCL for boards with sustainability committees and boards
shows that BSCOMM is positively associated with CSRSGY at 1%
without sustainability committees are 69.97% and 50.90%, respec-
significance level (β = 21.690, p < .001). This positive association is
tively. The t tests show that the differences in means of ENVN and
consistent with the findings of Mackenzie (2007) and Peterson et al.
SOCL are statistically significant (p < .001). Overall, these results
(2007) that the presence of a sustainability committee has a positive
indicate that firms with board sustainability committees exhibit better
impact on CSR strategy. Thus, Hypothesis 2 is supported. The
environmental and social performance. Similarly, the t test shows that
reported results from Column Model 3 show that CSRSGY is positively
the difference in means of CSRSGY is statistically significant (p < .001),
related to ENVN at the 1% significance level (β = 0.141, p < .001). This
thus indicating that boards with sustainability committees tend to
evidence supports Hypothesis 3a and suggests that the effectiveness
have more effective CSR strategies.
of CSR strategy is a significant predictor of corporate environmental
Table 4 presents descriptive statistics of all research variables used
performance. The results also show that when BSCOMM and CSRSGY
in the study. The mean value of ENVN is 68.19% with a standard devi-
are incorporated in the model, the explanatory value of BSCOMM
ation of 17.46%, and it ranges from 17.38% to 98.96%. The mean
decreases (β = 2.812, p > .100), compared with the explanatory value
value of SOCL is 66.71% and varies between 10.61% and 97.94%.
of BSCOMM in Model 1. This evidence confirms the existence of a
The average CSRSGY stands at 62.15% with a standard deviation of
mediating effect according to the classical approach to mediation
26.54%, and it varies between 0.48% and 99.84%. The summary sta-
suggested by Baron and Kenny (1986). Overall, the above empirical
tistics for BSCOMM show that approximately 83% of the firms have
results confirm the mediating role of CSR strategy in the relationship
a sustainability committee. The mean values of ROA, LEV, FCFTA,
between board sustainability committees and corporate environmen-
and CAPINT are 4.92%, 25.11%, 7.82%, and 0.80, respectively.
tal performance. Hence, Hypothesis 4a is supported.
Table 5 reports Pearson correlations for all research variables. The
Table 7 presents the empirical results obtained from FE regressions
estimated coefficients show that BSCOMM, CSRSGY, and SIZE are
with respect to social performance. As shown in Column Model 1,
TABLE 4 Descriptive statistics on research variables BSCOMM is positively related to SOCL at the 10% significance level
Variable Obs. Mean Std. Dev. Min Max (β = 2.876, p < .100), thus supporting Hypothesis 1b. This evidence

ENVN (%) 837 68.19 17.46 17.38 98.96

is consistent with the findings of Biswas et al. (2018), Mallin and
Michelon (2011), and Spitzeck (2009) that firms with a sustainability
SOCL (%) 837 66.71 17.60 10.61 97.94
committee exhibit better corporate social performance. The reported
CSRSGY (%) 837 62.15 26.54 0.48 99.84
results from Column Model 3 show that CSRSGY is positively associ-
BSCOMM 837 0.83 0.38 0.00 1.00
ated with SOCL (β = 0.125, p < .001). This evidence supports the
SIZE 837 22.94 1.28 19.67 26.45 notion that the effectiveness of CSR strategies leads to better social
ROA (%) 837 4.92 7.88 −52.98 104.88 performance (Helfaya & Moussa, 2017; Shaukat et al., 2016;
LEV (%) 837 25.11 14.59 0.00 79.88 Wijethilake, 2017), thus supporting Hypothesis 3b. The results also
FCFTA (%) 837 7.82 5.53 −11.15 32.71 show the significant relationship between BSCOMM and SOCL

CAPINT 837 0.80 1.46 0.00 14.25 reported in Column Model 1 (β = 2.876, p < .100) becomes insignifi-
cant in Column Model 3 (β = 0.160, p > .100). This evidence provides
Abbreviations: BSCOMM, board sustainability committee; CAPINT, capital
support for the mediation effect. Overall, these results suggest that
intensity ratio; CSRSGY, CSR strategy; ENVN, environmental performance;
FCFTA, free cash flows to total assets ratio; LEV, leverage ratio; ROA, the presence of a sustainability committee has a positive impact on
return on assets; SOCL, social performance. CSR strategy which in turn leads to superior social performance.
8 ORAZALIN

TABLE 5 Pearson correlation matrix

ENVN SOCL CSRSGY BSCOMM SIZE ROA LEV FCFTA CAPINT

ENVN 1
SOCL .599** 1
CSRSGY .616** .532** 1
BSCOMM .460** .408** .665** 1
SIZE .425** .581** .541** .365** 1
ROA .084* −.006 −.011 −.016 −.037 1
LEV −.068 .015 −.081* −.030 .053 −.265** 1
FCFTA .076* .177** .138** .074* .215** .240** −.144** 1
CAPINT −.047 .019 −.019 −.064 .194** .034 .144** .020 1

Note. N = 837.
*Correlation is significant at the 0.05 level (two‐tailed); **Correlation is significant at the 0.01 level (two‐tailed).

TABLE 6 Panel regression analysis

(Model 1) (Model 2) (Model 3)

ENVN CSRSGY ENVN

CSRSGY 0.141*** (3.60)

BSCOMM 5.860*** (2.89) 21.690*** (6.42) 2.812 (1.35)
SIZE 8.394*** (4.10) 4.808** (1.95) 7.718*** (3.79)
ROA 0.012 (0.27) 0.023 (0.28) 0.009 (0.21)
LEV −0.026 (−0.47) 0.130 (1.27) −0.044 (−0.79)
FCFTA 0.326*** (2.95) 0.116 (0.76) 0.309*** (2.98)
CAPINT 2.218*** (5.78) 0.387 (0.60) 2.163*** (5.69)
Industry effects Yes Yes Yes
Year effects Yes Yes Yes
Constant −134.6** (−2.87) −70.53 (−1.25) −124.734** (−2.69)
Number of observations 837 837 837
R‐squared (%) 22.42 51.64 25.91
F‐statistics 10.68*** 8.24*** 10.77***
Hausman test 49.65 46.47 47.80
(p‐value) 0.0000 0.0000 0.0026

Note. This table reports empirical results obtained from FE regressions. Specifically, Column Model 1 presents FE estimations of the effect of board sus-
tainability committees on environmental performance. Column Model 2 presents FE estimations of the effect of board sustainability committees on CSR
strategy. Colum Model 3 presents FE coefficients of the effects of board sustainability committees and CSR strategy on environmental performance.
Robust t‐statistics are reported in parentheses and based on robust standard errors corrected for autocorrelation and heteroscedasticity.
**Significant at 5% level; ***Significant at 1% level.

The results with respect to the control variables in Table 6 show
that SIZE is positively associated with ENVN at the 1% significance
level. Similarly, the results in Table 7 indicate that SIZE is positively
related to SOCL at the 1% significance level. Consistent with prior
literature (e.g., Artiach et al., 2010), this evidence indicates that firm
size has a positive impact on environmental performance and social
performance. Furthermore, SIZE is also positively associated with
CSRSGY at the 5% significance level. This evidence supports the
notion that larger and more visible firms face greater pressure from
the society and therefore have higher incentives to improve their
CSR orientation as well as to improve their sustainability performance
(Deegan, 2002). The reported results also show that FCFTA is positive
and statistically significant with ENVN and SOCL at the 1% and 10%
significance levels, respectively. This evidence is consistent with the
findings of Lourenço et al. (2012) that financial capacity has a positive
impact on corporate sustainability performance. With regard to capital
ORAZALIN 9

TABLE 7 Panel regression analysis

(Model 1) (Model 2) (Model 3)

SOCL CSRSGY SOCL

CSRSGY 0.125*** (2.89)

BSCOMM 2.876* (1.92) 21.690*** (6.42) 0.160 (0.08)
SIZE 8.560*** (4.13) 4.808** (1.95) 7.958*** (4.16)
ROA −0.041 (−0.92) 0.023 (0.28) −0.043 (−1.00)
LEV 0.043 (0.61) 0.130 (1.27) 0.026 (0.39)
FCFTA 0.244* (1.78) 0.116 (0.76) 0.229* (1.79)
CAPINT −0.082 (−0.22) 0.387 (0.60) −0.130 (−0.40)
Industry effects Yes Yes Yes
Year effects Yes Yes Yes
Constant −137.374*** (−2.88) −70.530 (−1.25) −128.541*** (−2.90)
Number of observations 837 837 837
R‐squared (%) 36.71 51.64 39.97
F‐statistics 8.02*** 8.24*** 9.06***
Hausman test 20.11 46.47 11.78
(p‐value) 0.0025 0.0000 0.0679

Note. This table reports empirical results obtained from FE regressions. Specifically, Column Model 1 presents FE estimations of the effect of board sus-
tainability committees on social performance. Column Model 2 presents FE estimations of the effect of board sustainability committees on CSR strategy.
Colum Model 3 presents FE coefficients of the effects of board sustainability committees and CSR strategy on social performance. Robust t‐statistics are
reported in parentheses and based on robust standard errors corrected for autocorrelation and heteroscedasticity.
*Significant at 10% level; **Significant at 5% level; ***Significant at 1% level.

intensity, the variable CAPINT is positively associated with ENVN at 4.1 | Additional analyses
the 1% significance level. This finding supports the view that firms
with greater capital intensity exhibit better environmental perfor- The study conducts a number of additional analyses to ascertain the
mance (de Villiers et al., 2011; Luo et al., 2012). However, CAPINT robustness of the main results. First, to confirm the mediating effect
is statistically insignificant with SOCL. Similarly, the estimated of CSR strategy, a bias corrected bootstrapping technique with
coefficients for ROA and LEV are insignificant with ENVN and SOCL, 5,000 resamples is employed to test the significance of the indirect
thus indicating that firm profitability and leverage have no impact on effect in line with Preacher and Hayes (2008). The results of the
corporate environmental and social performance. mediation analyses reported in Table 8 confirm the mediating role of
Overall, the findings support the resource dependency theory and positive CSR strategy in the relation between board sustainability
prior literature (e.g., Hillman & Dalziel, 2003; Kesner & Johnson, 1990;
Mackenzie, 2007; Peterson et al., 2007) that board‐level sustainability TABLE 8 Mediating effect of CSR strategy
committees improve the effectiveness of CSR strategies. Consistent
Model 1 Model 2
with the stakeholder theory, the findings support the notion that the BSCOMM→ENVN BSCOMM→SOCL
promotion of CSR strategies improves firm value by balancing the
Direct effect 4.174 4.575*
interests of all stakeholders (Freeman, 1984; Michelon & Parbonetti,
Indirect effect 17.166*** 14.497***
2012). These findings are consistent with prior studies indicating that
Total effect 21.340*** 19.072***
effective CSR strategies lead to better sustainability performance
(Aragón‐Correa et al., 2008; Post et al., 2015; Shaukat et al., 2016; Proportion of total effect 80.44% 76.01%
that is mediated
Wijethilake, 2017). Further, the findings suggest that the formation
of specialized sustainability committees leads to better corporate envi- Bias‐corrected confidence Lower:10.34 Lower:12.61
interval (CI) Upper: 13.99 Upper: 16.63
ronmental and social performance through effective CSR strategies,
Sobel test 13.15*** 10.82***
thus supporting the upper echelons theory (Forbes & Milliken, 1999;
Hambrick & Mason, 1984; Shahab et al., 2018). Taken together, the Aroian test 13.14*** 10.81***

study provides support for three overlapping and complementing Note. Bootstrap sample size is 5,000. Unstandardized regression coeffi-
theories and suggests that the effectiveness of CSR strategies explains cients are reported.
the positive relationships between board sustainability committees *Significant at 10% level;
and corporate sustainability performance. ***Significant at 1% level.
10 ORAZALIN

TABLE 9 GMM estimation of environmental performance and social performance

(Model 1) (Model 2) (Model 3) (Model 4)

ENVN ENVN SOCL SOCL

L.ENVN 0.613*** (5.18) 0.549*** (4.28)

L.SOCL 0.351*** (3.44) 0.333** (3.25)
BSCOMM 5.119** (2.44) 6.483*** (2.90)
CSRSGY 0.158*** (3.37) 0.143*** (3.88)
SIZE 1.524 (1.25) 0.213 (0.17) 4.079*** (3.50) 3.139** (2.52)
ROA 0.137* (1.81) 0.112 (1.08) −0.0455 (−0.71) −0.0615 (−0.84)
LEV −0.0320 (−0.65) −0.0377 (−0.71) −0.0198 (−0.33) −0.00460 (−0.08)
FCFTA −0.0423 (−0.50) −0.0298 (−0.37) 0.126 (1.21) 0.135 (1.26)
CAPINT −0.0212 (−0.01) 2.055 (0.55) 0.183 (0.07) 0.952 (0.34)
Industry effects Yes Yes Yes Yes
Year effects Yes Yes Yes Yes
Number of observations 728 728 728 728
Arellano‐Bond (AR‐2) 0.523 0.456 0.309 0.250
Hansen test p value 0.111 0.114 0.089 0.116

Note. This table reports the results of GMM regressions of environmental performance and social performance variables on board sustainability commit-
tees, CSR strategy, and other control variables. L.ENVN and L.SOCL are 1 year lagged environmental performance and social performance variables, respec-
tively. Heteroscedasticity‐adjusted robust standard errors are reported in parentheses.
*Significant at 10% level; **Significant at 5% level; ***Significant at 1% level.

committees and environmental performance (β = 17.166, p < .001; CI
[10.34, 13.99]). The results also indicate that the direct effect of CSR
strategy on environmental performance is insignificant (β = 4.174,
p > .100), thus suggesting full mediation. Similarly, the results from
the 95% confidence interval for the indirect effect also confirm the
mediating role of CSR strategy in the relation between board sustain-
ability committees and social performance (β = 14.497, p < .001; CI
[12.61, 16.63]).
Additionally, the Sobel and Aroian tests are applied to check the
significance of the mediation effect. The results reported in Table 8
reveal that CSR strategy significantly mediates the relationship
between board sustainability committees and environmental perfor-
mance (Sobel = 13.15, Aroian = 13.14; p < .001). Similarly, the results
show that CSR significantly mediates the relationship between board
sustainability committees and social performance (Sobel = 10.82,
Aroian = 10.81; p < .001). Hence, both Hypothesis 4a and Hypothesis
4b are supported. Overall, these results confirm the mediation effect
of CSR strategy and indicate that the impact of board sustainability
committees on corporate environmental and social performance is
fully contingent upon the mediation effect of CSR strategy. Therefore,
the presence of a sustainability committee becomes effective on
environmental and social performance indicators through the indirect
effect of CSR strategy.
The study also accounts for the fact that the relationship between
board sustainability committees and sustainability performance and
the relationship between CSR strategy and sustainability performance
are endogenous. To address these endogeneity issues, the study
conducts a two‐step generalized method of moments (GMM) estima-
tion in line with Roodman (2009). As shown in Table 9, the estimated
coefficients from GMM estimations are qualitatively similar to the
main results. In particular, BSCOMM and CSRSGY are positive and
statistically significant with ENVN. Similarly, the estimated coefficients
for BSCOMM and CSRSGY are positive and statistically significant
with SOCL. Further, the results from the Arellano‐Bond (AV‐2) and
Hansen tests indicate that potential endogeneity issues have been
tackled appropriately in the analysis. Overall, the results from two‐
step GMM estimations indicate that the main empirical results are
unlikely to be affected by possible endogeneity issues.
To confirm the robustness of the results reported in Tables 6 and 7,
the study also carries out additional analyses to test the sensitivity of
the main results to the presence of potential outliers in environmental
and social performance variables. Specifically, additional regression
analyses are performed after winsorizing the dependent variables at
the 5% level to remove potential outliers from both tails of the sample.
The estimated regression models provide qualitatively similar results
(due to space limitation not reported but available upon request), thus
supporting the main results reported in Tables 6 and 7.
5 | C O NC L U D I N G R E M A RK S
The aim of this study is to empirically investigate the impact of board
sustainability committees on environmental and social performance
and examine the mediating effect of CSR strategy in the relationship
between board sustainability committees and corporate environmen-
tal and social performance. The empirical results suggest that the
presence of a sustainability committee improves the effectiveness of
CSR strategies. The results also show that firms with effective CSR
ORAZALIN
strategies exhibit better environmental and social performance. Fur-
ther, the empirical results suggest that the effectiveness of CSR strat-
egy explains the positive relationship between board sustainability
committees and corporate environmental and social performance, thus
supporting the theoretical framework of the study. Overall, the
findings confirm the full mediation effect of CSR strategy and indicate
that the impact of board sustainability committees on corporate envi-
ronmental and social performance is fully contingent upon the media-
tion effect of CSR strategy. With regard to control variables, the
results reveal that firm size is an important underlying factor affecting
CSR strategy and corporate environmental and social performance.
The results also show that financial capacity has a positive impact on
corporate social performance.
The empirical findings of the study offer important practical impli-
cations for board members, managers, practitioners, investors, policy
makers, and regulators. First, the findings suggest that board members
and managers can improve the effectiveness of CSR strategies by
establishing specialized sustainability committees. Second, the findings
may help managers and board members in designing CSR practices
and strategies to improve sustainability performance and to signal to
stakeholders that their firms value and promote CSR and sustainability
activities. Third, the results suggest that responsible investors may ask
firms to establish specialized board sustainability committees to
manage and control environmental and social risks. Finally, the study
may be of interest to regulators and policy makers because the find-
ings suggest that specialized board sustainability committees enhance
and optimize sustainability performance through effective CSR strate-
gies. This evidence may motivate regulators and policy makers to
implement and enforce CSR practices and sustainability‐related poli-
cies. To promote effective CSR practices, sustainability‐related poli-
cies, and laws, regulatory authorities and policy makers may consider
establishing specialized board sustainability committees to constantly
monitor the implementation of CSR practices and sustainability‐related
policies among listed firms.
The study has a number of limitations that should be addressed by
future studies. First, it examines the effects of board sustainability
committees and CSR strategy on environmental and social performance
and does not account for other corporate governance mechanisms
affecting a firm's sustainability performance. Therefore, future studies
may contribute to the current literature by analyzing the effects of
other internal and external governance mechanisms on corporate
sustainability performance. Second, the study is limited to analyze the
mediating effect of CSR strategy in the relationship between board sus-
tainability committees and corporate environmental and social perfor-
mance. Hence, future studies may offer new insights by incorporating
other mediator and moderator variables such as employee motivation,
innovation performance, technology, organizational performance,
market orientation, and global strategic intentions. Finally, the study
investigates the data obtained from U.K. firms. Therefore, future
studies could replicate this study in other developed and developing
markets. Despite the limitations mentioned above, the study contrib-
utes to the current literature by providing empirical evidence that
board sustainability committees affect environmental and social
11
performance through effective CSR strategies. Hence, the findings of
the study highlight one important mechanism that might explain how
the presence of a sustainability committee affects corporate environ-
mental and social performance.
ORCID
Nurlan Orazalin https://orcid.org/0000-0002-2015-9268
RE FE RE NC ES
Aguinis, H., & Glavas, A. (2012). What we know and don't know about cor-
porate social responsibility: A review and research agenda. Journal of
Management, 38(4), 932–968. https://doi.org/10.1177/01492063
11436079
Alberici, A., & Querci, F. (2016). The quality of disclosures on environmen-
tal policy: The profile of financial intermediaries. Corporate Social
Responsibility and Environmental Management, 23(5), 283–296.
https://doi.org/10.1002/csr.1375
Al‐Tuwaijri, S. A., Christensen, T. E., & Hughes, K. E. (2004). The relations
among environmental disclosure, environmental performance, and eco-
nomic performance: A simultaneous equations approach. Accounting,
Organizations and Society, 29(5–6), 447–471. https://doi.org/10.1016/
S0361‐3682(03)00032‐1
Amran, A., Lee, S. P., & Devi, S. S. (2014). The influence of governance
structure and strategic corporate social responsibility toward sustain-
ability reporting quality. Business Strategy and the Environment, 23(4),
217–235. https://doi.org/10.1002/bse.1767
Aragón‐Correa, J. A., Hurtado‐Torres, N., Sharma, S., & García‐Morales, V.
J. (2008). Environmental strategy and performance in small firms: A
resource‐based perspective. Journal of Environmental Management,
86(1), 88–103. https://doi.org/10.1016/j.jenvman.2006.11.022
Aragón‐Correa, J. A., & Rubio‐López, E. A. (2007). Proactive corporate
environmental strategies: Myths and misunderstandings. Long Range
Planning, 40(3), 357–381. https://doi.org/10.1016/j.lrp.2007.02.008
Arda, O. A., Bayraktar, E., & Tatoglu, E. (2019). How do integrated quality
and environmental management practices affect firm performance?
Mediating roles of quality performance and environmental proactivity.
Business Strategy and the Environment, 28(1), 64–78. https://doi.org/
10.1002/bse.2190
Arena, C., Bozzolan, S., & Michelon, G. (2015). Environmental reporting:
Transparency to stakeholders or stakeholder manipulation? An analysis
of disclosure tone and the role of the board of directors. Corporate
Social Responsibility and Environmental Management, 22(6), 346–361.
https://doi.org/https://doi.org/10.1002/csr.1350
Artiach, T., Lee, D., Nelson, D., & Walker, J. (2010). The determinants of
corporate sustainability performance. Accounting and Finance, 50(1),
31–51. https://doi.org/10.1111/j.1467‐629X.2009.00315.x
Banerjee, S. B. (2001). Managerial perceptions of corporate environmental-
ism: Interpretations from industry and strategic implications for
organizations. Journal of Management Studies, 38(4), 489–513. https://
doi.org/10.1111/1467‐6486.00246
Barako, D. G., Hancock, P., & Izan, H. Y. (2006). Factors influencing volun-
tary corporate disclosure by Kenyan companies. Corporate Governance:
An International Review, 14(2), 107–125. https://doi.org/10.1111/j.
1467‐8683.2006.00491.x
Baron, R., & Kenny, D. (1986). The moderator‐mediator variable distinction
in social psychological research. Journal of Personality and Social Psychol-
ogy, 51(6), 1173–1182. https://doi.org/10.1037/0022‐3514.51.6.1173
12
Berrone, P., & Gomez‐Mejia, L. R. (2009). Environmental performance and
executive compensation: An integrated agency‐institutional perspec-
tive. Academy of Management Journal, 52(1), 103–126. https://doi.
org/10.5465/AMJ.2009.36461950
Bhupendra, K. V., & Sangle, S. (2015). What drives successful implementa-
tion of pollution prevention and cleaner technology strategy? The role
of innovative capability. Journal of Environmental Management, 155,
184–192. https://doi.org/10.1016/j.jenvman.2015.03.032
Biswas, P. K., Mansi, M., & Pandey, R. (2018). Board composition, sustain-
ability committee and corporate social and environmental performance
in Australia. Pacific Accounting Review, 30(4), 517–540. https://doi.org/
10.1108/PAR‐12‐2017‐0107
Burke, J. J., Hoitash, R., & Hoitash, U. (2019). The heterogeneity of board‐
level sustainability committees and corporate social performance. Jour-
nal of Business Ethics, 154(4), 1161–1186. https://doi.org/10.1007/
s10551‐017‐3453‐2
Christmann, P. (2000). Effects of “best practices” of environmental man-
agement on cost advantage: The role of complementary assets.
Academy of Management Journal, 43(4), 663–680. https://doi.org/10.
2307/1556360
Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008). Revisiting
the relation between environmental performance and environmental
disclosure: An empirical analysis. Accounting, Organizations and Society,
33(4), 303–327. https://doi.org/10.1016/j.aos.2007.05.003
Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2011). Does it
really pay to be green? Determinants and consequences of proactive
environmental strategies. Journal of Accounting and Public Policy,
30(2), 122–144. https://doi.org/10.1016/j.jaccpubpol.2010.09.013
Datta, D. K., Guthrie, J. P., & Wright, P. M. (2005). Human resource manage-
ment and labor productivity: Does industry matter? Academy of
Management Journal, 48(1), 135–145. https://doi.org/10.5465/AMJ.
2005.15993158
de Villiers, C., Naiker, V., & van Staden, C. J. (2011). The effect of board char-
acteristics on firm environmental performance. Journal of Management,
37(6), 1636–1663. https://doi.org/10.1177/0149206311411506
Deegan, C. (2002). The legitimising effect of social and environmental
disclosures—A theoretical foundation. Accounting, Auditing &
Accountability Journal, 15(3), 282–311. https://doi.org/10.1108/
09513570210435852
Deegan, C. (2014). An overview of legitimacy theory as applied within the
social and environmental accounting literature. Sustainability Account-
ing and Accountability, 2, 248–272.
Dixon‐Fowler, H. R., Ellstrand, A. E., & Johnson, J. L. (2017). The role of
board environmental committees in corporate environmental perfor-
mance. Journal of Business Ethics, 140(3), 423–438. https://doi.org/
10.1007/s10551‐015‐2664‐7
Escrig‐Olmedo, E., Muñoz‐Torres, M. J., Fernández‐Izquierdo, M. Á., &
Rivera‐Lirio, J. M. (2017). Measuring corporate environmental
performance: A methodology for sustainable development. Business
Strategy and the Environment, 26(2), 142–162. https://doi.org/10.
1002/bse.1904
Forbes, D. P., & Milliken, F. J. (1999). Cognition and corporate governance:
Understanding boards of directors as strategic decision‐making groups.
Academy of Management Review, 24(3), 489–505. https://doi.org/
10.2307/259138
Fraj‐Andrés, E., Martínez‐Salinas, E., & Matute‐Vallejo, J. (2009). Factors
affecting corporate environmental strategy in Spanish industrial Firms.
Business Strategy and the Environment, 18(8), 500–514. https://doi.org/
10.1002/bse.611
ORAZALIN
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pit-
man Series in Business and Public Policy (Vol. 1). https://doi.org/
10.2139/ssrn.263511
Garcia, A. S., Mendes‐Da‐Silva, W., & Orsato, R. (2017). Sensitive indus-
tries produce better ESG performance: Evidence from emerging
markets. Journal of Cleaner Production, 150, 135–147. https://doi.org/
10.1016/j.jclepro.2017.02.180
Giannarakis, G. (2014). Corporate governance and financial characteristic
effects on the extent of corporate social responsibility disclosure. Social
Responsibility Journal, 10(4), 569–590. https://doi.org/10.1108/SRJ‐
02‐2013‐0008
Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The relationship
between corporate social responsibility and shareholder value: An
empirical test of the risk management hypothesis. Strategic Manage-
ment Journal, 30(4), 425–445. https://doi.org/10.1002/smj.750
Halme, M., & Laurila, J. (2009). Philanthropy, integration or innovation?
Exploring the financial and societal outcomes of different types of cor-
porate responsibility. Journal of Business Ethics, 84(3), 325–339.
https://doi.org/10.1007/s10551‐008‐9712‐5
Halme, M., Rintamäki, J., Knudsen, J. S., Lankoski, L., & Kuisma, M. (2018).
When is there a sustainability case for CSR? Pathways to Environmen-
tal and Social Performance Improvements. Business and Society, 1–47.
https://doi.org/https://doi.org/10.1177/0007650318755648
Hambrick, D. C. (2007). Upper Echelons Theory: An update. Academy of
Management Review, 32(2), 334–343. https://doi.org/10.5465/AMR.
2007.24345254
Hambrick, D. C., & Mason, P. A. (1984). Upper Echelons: The organization
as a reflection of its top managers. Academy of Management Review,
9(2), 193–206. https://doi.org/10.5465/AMR.1984.4277628
Haque, F. (2017). The effects of board characteristics and sustainable com-
pensation policy on carbon performance of UK firms. The British
Accounting Review, 49(3), 347–364. https://doi.org/10.1016/j.
bar.2017.01.001
Haque, F., & Ntim, C. G. (2018). Environmental policy, sustainable develop-
ment, governance mechanisms and environmental performance.
Business Strategy and the Environment, 27(3), 415–435. https://doi.
org/10.1002/bse.2007
Helfaya, A., & Moussa, T. (2017). Do board's corporate social responsibility
strategy and orientation influence environmental sustainability disclo-
sure? UK evidence. Business Strategy and the Environment, 26(8),
1061–1077. https://doi.org/10.1002/bse.1960
Hillman, A. J., Cannella, A. A., & Paetzold, R. L. (2000). The resource depen-
dence role of corporate directors: Strategic adaptation of board
composition in response to environmental change. Journal of Manage-
ment Studies, 37(2), 235–256. https://doi.org/10.1111/1467‐
6486.00179
Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm perfor-
mance: Integrating agency and resource dependence perspectives.
Academy of Management Review, 28(3), 383–396. https://doi.org/
10.5465/AMR.2003.10196729
Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sus-
tainability performance: Analysis of triple bottom line performance.
Journal of Business Ethics, 149(2), 411–432. https://doi.org/10.1007/
s10551‐016‐3099‐5
Ioannou, I., & Serafeim, G. (2012). What drives corporate social perfor-
mance the role of nation‐level institutions. Journal of International
Business Studies, 43(9), 834–864. https://doi.org/10.1057/jibs.2012.26
Judge, W. Q., & Douglas, T. J. (1998). Performance implications of incorpo-
rating natural environmental issues into the strategic planning process:
An empirical assessment. Journal of Management Studies, 35(2),
241–262. https://doi.org/10.1111/1467‐6486.00092
ORAZALIN
Kassinis, G., & Vafeas, N. (2002). Corporate boards and outside stake-
holders as determinants of environmental litigation. Strategic
Management Journal, 23(5), 399–415. https://doi.org/10.1002/smj.230
Kesner, I. F., & Johnson, R. B. (1990). An investigation of the relationship
between board composition and stockholder suits. Strategic
Management Journal, 11(4), 327–336. https://doi.org/10.1002/smj.
4250110408
Klassen, R. D., & Whybark, D. C. (1999). The impact of environmental tech-
nologies on manufacturing performance. Academy of Management
Journal, 42(6), 599–615. https://doi.org/10.2307/256982
Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence,
environmental committee and greenhouse gas disclosure. The British
Accounting Review, 47(4), 409–424. https://doi.org/10.1016/j.bar.
2014.01.002
Liu, X., & Zhang, C. (2017). Corporate governance, social responsibility infor-
mation disclosure, and enterprise value in China. Journal of Cleaner
Production, 142(2), 1075–1084. https://doi.org/10.1016/j.jclepro.
2016.09.102
Lourenço, I. C., & Branco, M. C. (2013). Determinants of corporate sustain-
ability performance in emerging markets: The Brazilian case. Journal of
Cleaner Production, 57, 134–141. https://doi.org/10.1016/j.jclepro.
2013.06.013
Lourenço, I. C., Branco, M. C., Curto, J. D., & Eugénio, T. (2012). How does
the market value corporate sustainability performance? Journal of Busi-
ness Ethics, 108(4), 417–428. https://doi.org/10.1007/s10551‐011‐
1102‐8
Luo, L., Lan, Y. C., & Tang, Q. (2012). Corporate incentives to disclose car-
bon information: Evidence from the CDP Global 500 Report. Journal of
International Financial Management and Accounting, 23(2), 93–120.
https://doi.org/10.1111/j.1467‐646X.2012.01055.x
Mackenzie, C. (2007). Boards, incentives and corporate social responsibil-
ity: The case for a change of emphasis. Corporate Governance: An
International Review, 15(5), 935–943. https://doi.org/10.1111/j.1467‐
8683.2007.00623.x
Mahmood, M., & Orazalin, N. (2017). Green governance and sustainability
reporting in Kazakhstan's oil, gas, and mining sector: Evidence from a
former USSR emerging economy. Journal of Cleaner Production, 164,
389–397. https://doi.org/10.1016/j.jclepro.2017.06.203
Mallin, C., Michelon, G., & Raggi, D. (2013). Monitoring intensity and stake-
holders' orientation: How does governance affect social and
environmental disclosure? Journal of Business Ethics, 114(1), 29–43.
https://doi.org/10.1007/s10551‐012‐1324‐4
Mallin, C. A., & Michelon, G. (2011). Board reputation attributes and corpo-
rate social performance: An empirical investigation of the US Best
Corporate Citizens. Accounting and Business Research, 41(2), 119–144.
https://doi.org/10.1080/00014788.2011.550740
Mårtensson, K., & Westerberg, K. (2016). Corporate environmental strate-
gies towards sustainable development. Business Strategy and the
Environment, 25(1), 1–9. https://doi.org/10.1002/bse.1852
McKendall, M., Sánchez, C., & Sicilian, P. (1999). Corporate governance and
corporate illegality: The effects of board structure on environmental
violations. The International Journal of Organizational Analysis, 7(3),
201–223. https://doi.org/10.1108/eb028900
Michelon, G., & Parbonetti, A. (2012). The effect of corporate governance
on sustainability disclosure. Journal of Management and Governance,
16(3), 477–509. https://doi.org/10.1007/s10997‐010‐9160‐3
Orazalin, N., & Mahmood, M. (2018). Economic, environmental, and social
performance indicators of sustainability reporting: Evidence from the
Russian oil and gas industry. Energy Policy, 121, 70–79. https://doi.
org/https://doi.org/10.1016/j.enpol.2018.06.015
13
Pallant, J. (2007). SPSS survival manual: A step by step guide to data analysis
using SPSS for Windows (Version 15) (version 15). New York NY: Open
University Press, McGraw Hill.
Peterson, C. A., Philpot, J., & O'Shaughnessy, K. C. (2007). African‐Ameri-
can diversity in the boardrooms of the US fortune 500: Director
presence, expertise and committee membership. Corporate Governance:
An International Review, 15(4), 558–575. https://doi.org/10.1111/
j.1467‐8683.2007.00588.x
Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A
resource dependence approach. Harper and Row, 23, 358. https://doi.
org/10.2307/2392573
Pfeffer, J., & Salancik, G. R. (2003). The external control of organization: A
resource dependence perspective. Stanford, California: Standford Univer-
sity Press. https://doi.org/citeulike‐article‐id:695432
Phan, T. N., & Baird, K. (2015). The comprehensiveness of environmental
management systems: The influence of institutional pressures and the
impact on environmental performance. Journal of Environmental Man-
agement, 160, 45–56. https://doi.org/10.1016/j.jenvman.2015.06.006
Post, C., Rahman, N., & McQuillen, C. (2015). From board composition to
corporate environmental performance through sustainability‐themed
alliances. Journal of Business Ethics, 130(2), 423–435. https://doi.org/
10.1007/s10551‐014‐2231‐7
Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies
for assessing and comparing indirect effects in multiple mediator
models. Behavior Research Methods, 40(3), 879–891. https://doi.org/
10.3758/BRM.40.3.879
Qiu, Y., Shaukat, A., & Tharyan, R. (2016). Environmental and social disclo-
sures: Link with corporate financial performance. The British Accounting
Review, 48(1), 102–116. https://doi.org/10.1016/j.bar.2014.10.007
Reverte, C., Gómez‐Melero, E., & Cegarra‐Navarro, J. G. (2016). The influ-
ence of corporate social responsibility practices on organizational
performance: Evidence from Eco‐Responsible Spanish firms. Journal
of Cleaner Production, 112, 2870–2884. https://doi.org/10.1016/j.
jclepro.2015.09.128
Rodrigue, M., Magnan, M., & Cho, C. H. (2013). Is environmental gover-
nance substantive or symbolic? An empirical investigation. Journal of
Business Ethics, 114(1), 107–129. https://doi.org/10.1007/s10551‐
012‐1331‐5
Roodman, D. (2009). How to do xtabond2: An introduction to difference
and system GMM in Stata. The Stata Journal, 9(1), 86–136.
Russo, M. V., & Fouts, P. A. (1997). A resource‐based perspective on corpo-
rate environmental performance and profitability. Academy of
Management Journal, 40(3), 534–559. https://doi.org/10.2307/257052
Shahab, Y., Ntim, C. G., Chengang, Y., Ullah, F., & Fosu, S. (2018). Environ-
mental policy, environmental performance, and financial distress in
China: Do top management team characteristics matter? Business Strat-
egy and the Environment, 27(8), 1635–1652. https://doi.org/10.1002/
bse.2229
Sharma, S. (2000). Managerial interpretations and organizational context
as predictors of corporate choice of environmental strategy. Academy
of Management Journal, 43(4), 681–697. https://doi.org/10.2307/
1556361
Sharma, S., & Vredenburg, H. (1998). Proactive corporate environmental
strategy and the development of competitively valuable organiza-
tional capabilities. Strategic Management Journal, 19(8), 729–753.
https://doi.org/10.1002/(SICI)1097‐0266(199808)19:8<729::AID‐
SMJ967>3.0.CO;2‐4
Shaukat, A., Qiu, Y., & Trojanowski, G. (2016). Board attributes, corporate
social responsibility strategy, and corporate environmental and social
performance. Journal of Business Ethics, 135(3), 569–585. https://doi.
org/10.1007/s10551‐014‐2460‐9
14
Spira, L. F., & Bender, R. (2004). Compare and contrast: Perspectives on
board committees. Corporate Governance: An International Review,
12(4), 489–499. https://doi.org/10.1111/j.1467‐8683.2004.00389.x
Spitzeck, H. (2009). The development of governance structures for corpo-
rate responsibility. Corporate Governance: The International Journal of
Business in Society, 9(4), 495–505. https://doi.org/10.1108/14720700
910985034
Tuggle, C. S., Schnatterly, K., & Johnson, R. A. (2010). Attention patterns in
the boardroom: How board composition and processes affect discus-
sion of entrepreneurial issues. Academy of Management Journal, 53(3),
550–571. https://doi.org/10.5465/amj.2010.51468687
Udayasankar, K. (2008). Corporate social responsibility and firm size. Journal
of Business Ethics, 83(2), 167–175. https://doi.org/10.1007/s10551‐
007‐9609‐8
Walker, K., Ni, N., & Dyck, B. (2015). Recipes for successful sustainability:
Empirical organizational configurations for strong corporate environ-
mental performance. Business Strategy and the Environment, 24(1),
40–57. https://doi.org/10.1002/bse.1805
Walls, J. L., Berrone, P., & Phan, P. H. (2012). Corporate governance and
environmental performance: Is there really a link? Strategic Manage-
ment Journal, 33(8), 885–913. https://doi.org/10.1002/smj.1952
Wang, H., Tong, L., Takeuchi, R., & George, G. (2016). Corporate social
responsibility: An overview and new research directions. Academy of
ORAZALIN
Management Journal, 59(2), 534–544. https://doi.org/10.5465/amj.
2016.5001
Wijethilake, C. (2017). Proactive sustainability strategy and corporate sus-
tainability performance: The mediating effect of sustainability control
systems. Journal of Environmental Management, 196, 569–582.
https://doi.org/10.1016/j.jenvman.2017.03.057
Wijethilake, C., & Lama, T. (2018). Sustainability core values and sustain-
ability risk management: Moderating effects of top management
commitment and stakeholder pressure. Business Strategy and the Envi-
ronment, 28(1), 143–154. https://doi.org/10.1002/bse.2245
Ziegler, A., & Schröder, M. (2010). What determines the inclusion in a sus-
tainability stock index?. A panel data analysis for european firms.
Ecological Economics, 69(4), 848–856. https://doi.org/10.1016/j.
ecolecon.2009.10.009
How to cite this article: Orazalin N. Do board sustainability
committees contribute to corporate environmental and social
performance? The mediating role of corporate social responsi-
bility strategy. Bus Strat Env. 2019;1–14. https://doi.org/
10.1002/bse.2354