Boards of directors and environmental sustainability: Finding the synergies that yield results

For Peer Review Boards of directors and environmental sustainability: finding the synergies that yield results Journal: Business Strategy and the Environment Manuscript ID BSE-22-1353.R2 Wiley - Manuscript type: Research Article Keywords: Board composition, Corporate Governance mechanisms, Environmental sustainability, Environmental performance, Fuzzy logic, Qualitative Comparative Analysis http://mc.manuscriptcentral.com/bse Business Strategy and the Environment For Peer Review 1 Boards of directors and environmental sustainability: finding the synergies that yield results Abstract Boards of directors play an important role in one of the biggest challenges facing companies today: environmental sustainability. While research has mainly focused on the individual and isolated impacts of board composition characteristics on environmental sustainability, we aim to provide an understanding of what combinations of these characteristics result in its high/low levels and why. Using a fuzzy set qualitative comparative analysis of a Spanish company’s sample over the period 2014–2019, we find that the characteristics of board composition could be complemented or substituted among them, having a similar impact on environmental sustainability performance. We also find that large boards, with a high presence of women, and a low presence of family members led to high environmental sustainability while having no dedicated sustainability committee and a lack of independence with no family presence yielded a low one. Finally, we draw four strategies for the design of the board composition. Keywords Board composition, Corporate Governance mechanisms, Environmental sustainability, Environmental performance, Fuzzy logic, Qualitative Comparative Analysis 1. Introduction Environmental sustainability is one of the great challenges of this century (Daradkeh et al., 2022; Omar et al., 2021). International initiatives (European Commission, 2019; United Nations Framework Convention on Climate Change, 2015) call for greater awareness and commitment from most companies. Moreover, sustainability indexes (e.g. Dow Jones Sustainability World Index, n.d.) make companies that demonstrate environmentally sustainable behaviour more attractive to investors. Greater concern over the environmental effects of company behaviour (Aragón-Correa et al., 2008; Kassinis & Vafeas, 2002) has focused attention on governance (Ortiz-de-Mandojana & Aragón-Correa, 2015). In this sense, academics increasingly recognize that decisions over environmental sustainability should for various reasons correspond to corporate governance (Walls et al., 2012; Walls & Berrone, 2017). On the one hand, environmental initiatives often require substantial investment (Walls et al., 2012). On the other hand, such initiatives imply long-term decisions that need coordination between different corporate governance actors (Aguilera et al., 2021). Among the different governance bodies, the role of the board stands out (de Villiers et al., 2011; Walls et al., 2012). Hence, nondelegable powers and the responsibility to promote environmental sustainability policies are in the hands of the board of directors (CNMV, 2020). The environmental strategy becomes one of the primordial duties of the board (Kassinis & Vafeas, 2002) because environmental problems can involve risks to the reputation that will finally damage the financial performance (Ben-Amar & McIlkenny, 2015). Nevertheless, due attention has yet to be paid to the characteristics that define the composition of each board and how they can impact environmental sustainability (Aguilera et al., 2021); an even more relevant question, if it is contemplated that many internal governance mechanisms within a company depend on the composition of the board (Ludwig & Sassen, 2022; Oh et al., 2018; Rediker & Seth, 1995). Previous works have analysed the relationships between environmental sustainability (Aguilera et al., 2021; Endrikat et al., 2021) and independence (Hussain et al., 2018), diversity (Endrikat et al., 2021; García‐Sánchez et al., 2022), and board size (Liao et al., 2015; Walls et al., 2012). In these studies, to the best of our knowledge, the influence of each characteristic has been considered individually, obtaining positive, negative or unrelated results. These inconsistencies may result from the assumption that each characteristic has independent effects, even though all the characteristics interact with each other (Aguilera et al., 2012; Oh et al., 2018). In this way, as happens between the Page 1 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 2 different governance mechanisms within the company (García‐Sánchez et al., 2022; Oh et al., 2018; Ponomareva et al., 2021; Rediker & Seth, 1995) some characteristics that define the composition of the board can function as substitutes or complements, being relevant to identify the different combinations of characteristics or configurations, which are linked to the achievement of either high or low levels of corporate environmental performance. Among other possible ‘bundles’ for example, it is coherent to consider whether a greater or a lower presence of women (Byron & Post, 2016; Endrikat et al., 2021) might substitute or might complement to the proportion of independent directors (de Villiers et al., 2011), in terms of similar effects. The knowledge gap described above is filled in this paper. Based on a configurational perspective, we address the following overarching research questions. Do combinations of characteristics of board composition differ in relation to the high/low levels of environmental sustainability that companies achieve? If so, in what way do they differ? We identify configurations, combinations of causal conditions, using fuzzy-set Qualitative Comparative Analysis (fsQCA) (Ragin, 2000, 2008), that are sufficient (Lewellyn & Muller-Kahle, 2021) to produce high/low levels of sustainable environmental performance. We analysed 60 companies listed on the Madrid Stock Exchange over the period 2014–2019 to achieve our goal. Our results described the composition of the board in terms of a bundle of different characteristics whose effects differed from the effects of each individual characteristic. The main findings show that the characteristics defining the composition of the board complement and substitute each other in it impacts on environmental sustainability performance. There are several contributions of this paper to the literature: its results (i) enrich the nexus between boards and environmental sustainability (Walls et al., 2012; Walls & Berrone, 2017); (ii) contribute to the corporate governance bundling hypothesis (Aguilera et al., 2012; Oh et al., 2018); (iii) provide empirical evidence demonstrating that the stakeholder or shareholder perspective of corporate governance results in multiple board design strategies. The rest of this paper is structured as follows. Firstly, the theoretical background is presented and the authors' propositions are set out. Secondly, an empirical test is performed using fsQCA. Subsequently, a discussion of these results and their theoretical and managerial implications are given. The study concludes with a brief outline of its limitations and some suggestions for future research. 2. Research Background on Boards and Environmental Sustainability Performance Recently, scholars studying environmental management have devoted significant efforts to understanding why companies facing similar situations achieve heterogeneous performances. Their conclusions were that the governance of the company explained one of the reasons for such a diversity of responses (Walls & Berrone, 2017). Hence, the calls for boards to involve themselves more in environmental sustainability (Walls et al., 2012). Environmental sustainability refers to the set of corporate behaviours and strategies that mitigate the impact of industry on the natural environment, which include implementing actions that reduce energy consumption and waste, using ecologically sustainable resources and employing environmental management systems (Aguilera et al., 2021; Walls et al., 2012). The three most common environmental sustainability outcomes in the literature are as follows: environmental strategy, which refers to the overall approaches of companies to deal with the natural environment; environmental performance, which captures corporate environmental impacts; and environmental reporting/disclosures, which refers to the public provision of information on the environmental impact of companies and their initiatives within that field (Aguilera et al., 2021). Our work is focused on environmental performance. Page 2 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 3 Most of the literature on the relationship between boards and the environmental sustainability performance of companies is grounded in agency theory, resource dependence theory and upper echelons’ perspective (see appendix 1). However, it remains unclear whether and if so, how board composition influences the environmental sustainability performance of the company because previous studies have reached non-conclusive results (Table 1). In addition, the characteristics that define the composition of a board are interdependent, in such a way that the effects of one characteristic differ as a function of the presence or absence of the other (Lewellyn & Muller-Kahle, 2021). We, therefore, propose to incorporate the configurational perspective, to study this relation (Aguilera et al., 2012). The idea of identifying a set of decisive characteristics to distinguish between different configurations has a long history in management research (Busenbark et al., 2016; Gupta et al., 2020) and is a promising research strategy in the field of corporate governance (Aguilera et al., 2021; Ponomareva et al., 2021). --- Insert Table 1 above here --- Consequently, Aguilera et al. (2012) proposed that multiple governance mechanisms interactively influence organizational outcomes in a complex way, shaping a “bundle of governance mechanisms”. Rediker & Seth (1995) identified substitution effects between board monitoring, large outside shareholders monitoring, and the alignment of managerial incentives. Desender et al. (2013) demonstrated that the board function of monitoring is contingent upon company ownership and the type of controlling shareholder. Misangyi & Acharya’s (2014) findings suggested that high profits resulted when CEO incentive alignment and monitoring mechanisms worked together in complementary ways rather than as exclusive substitutes. Oh et al. (2018) explored whether the effects of multiple governance mechanisms on the success or otherwise of Corporate Social Responsibility (CSR) were substitutable or complementary. Ponomareva et al. (2021) find that the configurations of board practices conforming to the global good governance norm are associated with higher board compensation than those that score low on conformity. However, configurational analysis has been scarcely applied to the interdependent nature of the variables that define the composition of the board (Ponomareva et al., 2021), which are in turn those that determine the board's governance mechanisms. The concepts of complementarity and substitution are fundamental to a configurational approach (Misangyi et al., 2017). Complementarity suggests that the effect of one condition on a result depends on the effects of others, in such a way that the conditions mutually reinforce each other. Substitution refers to the effects of various conditions that are functionally equivalent, in such a way that they can be mutually substituted to obtain roughly similar results (Misangyi & Acharya, 2014). Thus, the variables that define the composition of a board can interact as complements or substitutes for each other. Following the arguments of the configurational approach (Aguilera et al., 2012; Misangyi & Acharya, 2014), we analyse the different variables of the board, their interaction with each other, and their complementary and substitutive effects when explaining environmental sustainability performance. The variables used in this work (Amran et al., 2014; Endrikat et al., 2021; Hussain et al., 2018; Rodrigues et al., 2020) are board size, board independence, CEO-chairperson duality, board tenure, family members on boards, women on boards and board sustainability committees. The reasons that justify their choice are as follows: (i) they feature among the most frequently studied characteristics of boards (Ludwig & Sassen, 2022); (ii) they are measurables variables that can provide insight into the role of the board of directors in relation to performance (Endrikat et al., 2021; Rodrigues et al., 2020) and; (iii) research on these variables has, with regard to environmental sustainability, produced mixed empirical findings (Hussain et al., 2018; Ludwig & Sassen, 2022). 2.1. Board size Previous studies on the influence of board size on the environmental sustainability of companies have not always produced conclusive results (Amran et al., 2014). The principal arguments that justify a positive relation (Aguilera et al., 2021; de Villiers et al., 2011; Ludwig & Page 3 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 4 Sassen, 2022) are as follows. Larger boards are more likely to: (i) bring together directors with different knowledge, experience, and skills and thus enrich the decision-making process (Dalton et al., 1998), including all those related to environmental issues; (ii) have one or more directors who have previously been exposed to an environmental agenda (de Villiers et al., 2011); (iii) gain access to critical financial resources for environmental initiatives; and (iv) represent the interests of diverse stakeholders (Pucheta-Martínez & Gallego-Álvarez, 2019) which translates into greater effectiveness in monitoring directors' opportunistic behaviour in the environmental field (Epstein et al., 2015). However, smaller boards turn out to be better coordinated, more engaged and have better communication between directors (Pucheta- Martínez & Gallego-Álvarez, 2019), essential aspects for environmental management (Rao et al., 2012). Therefore, Hussain et al. (2018) proposed a negative relationship between the number of directors and environmental performance, arguing that whenever boards are larger, the ability to monitor environmental performance appears to deteriorate. 2.2. Board independence Board independence constitutes an internal mechanism that serves as a counterpoint to the TMT (Liao et al., 2018). Independent directors feel more motivated to promote responsible environmental behaviour within the companies they serve (Cosma et al., 2021) due to the following reasons: (i) good environmental performance improves the position of the company in relation to other stakeholders (Ortiz-de- Mandojana & Bansal, 2016); (ii) independent directors are more likely to see the long-term potential of investment in environmental projects (de Villiers et al., 2011; Endrikat et al., 2021); (iii) they seek to protect their own reputation (de Villiers et al., 2011) and, finally; (iv) as they are external to the organization, they are invested with a responsibility towards a wider audience (Hussain et al., 2018). Positive relations are confirmed in the previous literature between board independence and environmental performance (de Villiers et al., 2011; Endo, 2020; Hussain et al., 2018). In comparison, much less work demonstrates a negative (Orazalin & Mahmood, 2021; Walls et al., 2012) or no relationship (Beji et al., 2021; Nguyen & Thanh, 2021). We argue that independent boards will have positive consequences on the environmental performance of the organization. 2.3. CEO-Chairperson duality We use the term duality when the position of CEO and chairperson of the boards is held by the same person. Research on this issue has shown that duality can be considered either desirable or undesirable (Aktas et al., 2019) in relation to sustainability (Hussain et al., 2018). A CEO who also chairs the board is in a more powerful position and may prioritize personal interests at the expense of stakeholder demands (Khan et al., 2013), neglecting environmental sustainability due to the interests of the TMT to prioritize short-term financial gains at the expense of investments in environmental initiatives (Aguilera et al., 2021; de Villiers et al., 2011). On the other hand, previous studies have shown that a dual CEO in a quest for a good reputation and legitimacy in the eyes of society could opt to promote environmental responsibility (Pucheta-Martínez & Gallego-Álvarez, 2019). Moreover, in an actual context, with governments, investors, consumers, employees, and society calling for stronger and more urgent responses to the environmental crisis, the commitment of the CEO to this type of behaviour could guarantee his/her continued tenure and increase their remuneration (Pucheta-Martínez & Gallego-Álvarez, 2019). In addition, duality will allow the CEO to exercise strong and unambiguous sustainability leadership, setting the board agenda (Muttakin et al., 2018). Page 4 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 5 2.4. Board tenure The literature studying the relationship between board tenure and environmental performance is sparse and non-conclusive. Thus, some previous studies have indicated that boards with long-tenured directors are associated with greater rigidity (Katmon et al., 2019), a lower propensity to innovate, risk aversion, and limited sources of information (Chen, 2013). As the directors’ stay on the board lengthens, they become entrenched and are less receptive to external information, are more tied to past cognitive schemes (Carpenter & Westphal, 2001), and more committed to the status quo (Veltrop et al., 2015). Instead, environmental initiatives are associated with investments, risk, or longterm returns. These require proactive behaviour to be promoted. Conversely, Katmon et al. (2019) also state that boards with long-tenured directors result in more experience with company policies, rules and activities. So, they can provide better guidance and counsel (Hillman & Dalziel, 2003); better, more frequent and more coordinated communication, thereby reducing information asymmetry (Rutherford & Buchholtz, 2007); a long-term linkage, improving the achievement of goals and a unique, individualized response to internal and external stakeholders (Johnson et al., 2013); then, high levels of corporate environmental responsibility may be expected. 2.5. Family members on boards Shareholders are major influencers in company decisions to invest in environmental activities (Crifo et al., 2016). Among the different types of owners, we focus on family-owned companies. In this case, the orientation toward environmental sustainability only arises if there is family commitment and orientation over the long term (Dou et al., 2019; Sharma & Sharma, 2011); although there are works that have found no relation or a negative one (Aguilera et al., 2021). Family directors see their image and reputation as connected to the family company. When directors are also family members, they are expected to be more concerned about not damaging the company’s reputation through environmentally irresponsible actions (Cordeiro et al., 2020). Therefore, the involvement of the family understood as the number of family members who occupy positions in company governance (Cabrera-Suárez et al., 2014), is of tremendous relevance: when involvement is high, they tend towards higher levels of sustainability commitment and have more proactive attitudes towards sustainability practices (Broccardo et al., 2019). On the contrary, Memili et al., (2018) highlighted a negative relationship between family involvement and sustainability practices: family-owned companies may refrain from adopting sustainability practices, as their implementation often requires innovation and a degree of risk unless the business is under significant threat. Practices that deviate from past strategies may be perceived as a violation of family tradition and history and may meet the resistance of family owner-directors. 2.6. Women on boards Gender appears to be the most popular diversity factor linking environmental issues (Cordeiro et al., 2020; Ludwig & Sassen, 2022). Previous research has focused attention on the relationship between gender and environmental disclosure (Ben-Amar et al., 2017; Cucari et al., 2018; Hollindale et al., 2019), environmental performance (Lu et al., 2019; Post et al., 2015), environmental policies (Li et al., 2017), and environmental consciousness (Kassinis et al., 2016). Overall, women are keen on higher levels of sustainability (Calabrese et al., 2016) and a higher percentage of women on the board has been associated with a stronger commitment to environmental issues (Fernandez-Feijoo et al., 2014). Along these lines, Glass et al. (2016) affirmed that women consistently encouraged environmental sustainability development, and Liu et al. (2020) pointed out that female directors promoted environmental responsibility as a strategic choice. Page 5 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 6 The arguments on which the literature is based to justify this positive relation are as follows: i) female directors have different preferences and educational and experience backgrounds (Hillman et al., 2002) and often bring diverse information, resources, and perspectives to the board (Byron & Post, 2016); therefore, boards with greater female representation are more likely to develop a peripheral vision such as addressing environmental issues (Liu et al., 2020); ii) female directors are more likely to help the company build an orientation towards various stakeholder interests (Hillman et al., 2002). However, Galbreath (2009) found no relation between women directors and the performance levels of governance practices that address climate change. Subsequent studies (Ben-Amar et al., 2017; Fernandez-Feijoo et al., 2014; Post et al., 2011) therefore proposed the need for a quota or a minimum number of women directors; reinforcing the research based on Critical Mass Theory (Torchia et al., 2011). A single female director on the board is considered a mere ‘token’ and can be easily marginalized, but as the size of the minority group increases, women are able to gain trust, influence, and challenge majority decisions (Liu et al., 2020). Then, we argue that the percentage of women on a board will positively impact the environmental performance of the organization. 2.7. Board sustainability committee Companies that have sustainability committees within their board structure are increasing (Spencer Stuart, 2021). Creation, implementation, and monitoring of environmental policies are fundamental tasks of these committees (Ludwig & Sassen, 2022). Therefore, the presence of a sustainability committee is a sign of the commitment of the company toward sustainability in general and environmental sustainability in particular (Endrikat et al., 2021). The existence of these committees is essential because relevant decisions made by the board often occur in board-level committees and because board committees influence company outcomes in more meaningful ways than the board (Dalton et al., 1998; Endrikat et al., 2021) Prior research has substantiated the positive link between the presence of a sustainability committee and environmental performance (Dixon-Fowler et al., 2017; Hussain et al., 2018; Walls et al., 2012). These committees can give the company deeper and more specialized knowledge of environmental issues and their participants may have ties with relevant environmental constituencies (Dixon-Fowler et al., 2017). Moreover, there is a broad consensus that a sustainability committee that forms part of the structure of boards will positively affect environmental disclosure (Helfaya & Moussa, 2017; Ludwig & Sassen, 2022). We, therefore, propose that a sustainability committee on the boards could be a relevant condition in the search for the equifinality of results. In summary, each of the characteristics under analysis can be used to determine how board composition affects the degree of the environmental performance of the company. 3. Data and method 3.1. Data We considered the companies listed in the continuous market of the Madrid Stock Exchange over the years 2014-2019. The study period began in 2014 because companies had to stop to rethink their business model, instituting changes toward more sustainable models that could determine their longer-term success. The year 2019 was the last one with available information. The sample selected to perform our study is relevant for two fundamental reasons. Firstly, global pressure on environmental issues (i.e., United Nations Framework Convention on Climate Change, 2015) affects all large companies in the world as Spanish-listed companies, which have similar legislation and recommendations (OECD, 2021). These companies usually state environmental sustainability concerns Page 6 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 7 since their visibility implies closer supervision by the different stakeholders. Secondly, we have chosen listed companies because they (i) provide public and homogeneous information (ii) expose, through the mandatory reports, their corporate governance practices and (iii) due to their volume, their activities have a greater impact on society and the environment. Initially, the number of companies listed during the entire time horizon was 159. A data-cleaning process was performed to include only companies with all the data on the conditions and the outcome. The numbers of listed companies fluctuated over the years of the study, which resulted in an unbalanced panel of 60 companies and 310 company-year observations. Each company-year observation is considered a case. Information regarding board composition was extracted from the NRGmetrics database for the years 2014-2019 but, the data on the presence of family members on the boards for the financial industry was supplemented by the annual corporate governance reports available from the CNMV website. Information on the environmental performance of each company was collected from CSRHub (https://www.csrhub.com), a rating tool specialized in classifying and reporting CSR (Lin et al., 2020). CSRHub splits the information into twelve subcategories based on the following four main categories: community, employees, environment, and governance. Specifically, the environment category comprised three subcategories: energy and climate change (ECC), environmental policy and reporting, and resource management. We used ECC as a proxy of the environmental performance of the organization, as it is an objective and easily quantifiable measure of efforts within a company to reduce its environmental impact so that all indicators are moving in the same direction. Unlike other data providers, CSRHub collects information from Spanish-listed firms and provides a data format that uses a single value for each category/subcategory, which makes a meaningful interpretation based on the analysis. The final rating of a firm is built by aggregating and normalizing the information from; socially responsible investing firms, well-known indexes, publications, crowdsources, government agencies and CSR rating providers. Assuming that the impact of governance mechanisms on environmental performance may differ, the outcome variable is included with a one-year lag, therefore the data collected from CSRHub ranged from 2015 to 2020. Table 2 lists the attributes of the data. --- Insert Table 2 here --- 3.2. Variables In this section, the outcomes and the conditions applied in this study are described, including the decisions on calibration for fsQCA, information which is summarized in Table 2. 3.2.1. Outcome CSRHub assigns a monthly score for each of its categories and subcategories, including ECC. Our performance outcome is the yearly median. Thus, the outcome is a continuous variable, which takes a range of values from 0 to 100. The higher the score, the better the company’s rating. 3.2.2. Conditions A configuration model that incorporated the key characteristics of the board composition was structured with seven conditions that may be considered as follows: board size, board independence, CEO-chairperson duality, board tenure, family members on boards, women on boards and board sustainability committees. Page 7 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 8 Thus, (i) board size is referred to as the number of board members (Endrikat et al., 2021; Jain & Zaman, 2020); (ii) board independence is considered as the percentage of independent directors on the board (Jain & Zaman, 2020; Rodrigues et al., 2020); (iii) duality is a dummy variable that takes a value of either 1 or 0 if the CEO is also the chairperson or otherwise (Aguilera et al., 2021); (iv) board tenure is the average number of years on the board of all board directors (Rodrigues et al., 2020); (v) family members on boards is the percentage of family directors where the company is a family-owned company; (vi) women on boards is counted as the number of women directors among the total number of board members (Cordeiro et al., 2020; Jain & Zaman, 2020); and (vii) the board sustainability committee is a dummy variable which takes a value of either 1 or 0, according to whether a sustainability committee exists or otherwise (Aguilera et al., 2021; Jain & Zaman, 2020). 3.3. Method As Ragin (2000) noted, fsQCA is a research method that uses Boolean algebra to compare cases with a combination of conditions that yields an outcome (Ragin, 2000). The most relevant of this method is that it “reveals patterns of associations across sets of cases supporting the existence of causal relations” (Schneider & Wagemann, 2010, p. 412). Due to the nature of the data, we used fs/QCA software 3.0, which can handle binary and continuous variables. The fsQCA method can establish (i) equifinality, i.e., multiple configurations yield the same outcome; (ii) complex causality situations, where independent variables are treated as factors potentially causing an outcome; and (iii) can cause asymmetry, where the negation of the outcome is not necessarily contrary to the condition that can lead to that same outcome (Berg-Schlosser et al., 2009). Moreover, it provides a holistic solution (Berg-Schlosser et al., 2009) in line with the true nature of the business world (Villalba-Ríos et al., 2022). The fsQCA method consists of the following five main steps (Schneider & Wagemann, 2012): (i) identify the relevant causal conditions that are involved in a specific outcome; (ii) calibrate the conditions and the outcomes; (iii) generate the truth table; (iv) reduce the truth table using the minimization algorithm; and (v) evaluate and interpret the results. The first step has been discussed in the theoretical framework. In the second step, calibration, raw data are converted into set membership scores (Ragin, 2008a). The recommended calibration method is direct calibration (Lee & Chen, 2018; Ragin, 2008b). Calibration requires the definition of three observation points to indicate full non-membership, maximum ambiguity, and full membership (Ragin, 2008b). Calibration should be theory-based (Lewellyn & Muller-Kahle, 2021); however, when it is not possible, it will be based on the sample distribution (Misangyi et al., 2017). The Code of Good Governance for listed companies (CNMV, 2020) recommends that the size of the boards should be between 5 and 15 members. The calibration is 5 members for full non-membership and 15 members for full membership. The 12 members median is set as the maximum ambiguity point. Moreover, CNMV (2020) recommends having independent directors in at least half of all positions as a regular rule. But, in certain circumstances, lower the limit to one-third. So, we considered half as the point of maximum ambiguity, one-third for full non-membership and two-thirds as the point of full membership. The point of full membership was set at 50%, to calibrate the presence of family members on boards, because at those levels most of the board members formed part of the same family. Moreover, 10% was the point of maximum ambiguity, because there was a minimum Page 8 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 15 extended to other governance bodies, such as the TMT, and any possible interrelations between them should be studied. In third place, this work has been limited to a study of the environmental performance of companies. We propose a detailed analysis of the relationship between corporate governance and the non-financial results of companies, incorporating social performance in our research. Finally, low environmental performance is not synonymous with environmental deterioration, for which reason examining the relation between governance and environmental irresponsibility emerges as an attractive line of research. A further point is that causality cannot be affirmed through the QCA approach, for which reason this question must be approached in different ways. Our data were sourced from NGR metrics and CSRHub, for which reason they are constrained by the characteristics of these sources; therefore, incorporating other sources of data could contribute to enriching the results. Finally, we are aware of the limitation that is implicit in the lack of theoretical arguments for the calibration of some of our conditions which could lead to results that are not fully satisfactory. It might therefore be of great interest to advance toward commonly accepted criteria for “good governance”. 6. References Aguilera, R., Desender, K., & Kabbach de Castro, L. R. (2012). A bundle perspective to comparative Corporate Governance. In T. Clarke & D. Branson (Eds.), The SAGE Handbook of Corporate Governance (pp. 379–405). Aguilera, R. v. (2018). Corporate Governance Deviance. 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Strategic Management Journal, 33(8), 885– 913. https://doi.org/10.1002/smj.1952 Page 19 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 20 Figure 1: Board design strategies Stakeholdersoriented Shareholdersoriented Low discretion High discretion Explicit recommendations (Code of Good Governance) H3b, H5d, H9g y H13j Directors Centered L1a y L7e Implicit recommendations (Code of Good Governance) H1a, H2b, H4c y H7f CEO centered L4d y L5b Page 20 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 21 Table 1. Prior studies on board composition and environmental performance Board composition dimension Empirical result Outcome Author + Environmental performance Beji et al. (2021); de Villiers et al. (2011); Endo (2020); Nguyen et al. (2021); Walls et al. (2012) Board size 0 Environmental performance García Martín & Herrero (2020) ; Hussain et al. (2018); Orazalin, & Mahmood (2021) Environmental performance de Villiers et al. (2011); Endo (2020); Hussain et al. (2018) Renewable energy alliances Post et al. (2015) + Environmental CSR Post et al. (2011) Environmental performance Beji et al. (2021); García Martín & Herrero (2020); Nguyen et al. (2021) Carbon performance : carbon reduction initiatives Haque (2017) 0 Environmental CSR Uyar et al. (2020) Board independence - Environmental performance Orazalin, & Mahmood (2021); Walls et al. (2012) 0 Environmental performance de Villiers et al. (2011); García Martín & Herrero (2020); Walls et al. (2012) CEO- Chairperson duality - Environmental performance Beji et al. (2021); Hussain et al. (2018) Board tenure 0 Environmental performance de Villiers et al. (2011) + Environmental performance Berrone, et al. (2010) 0 Environmental performance Endo (2020) Family members on boards - Sustainability practices Memili et al. (2018) Environmental performance Beji et al.(2021); Elmagrhi et al. (2019); Galletta et al. (2022); García Martín & Herrero (2020); Lu et al.(2019); Orazalin, & Mahmood (2021) Environmental CSR Cordeiro et al. (2020);Post et al. (2011); Uyar et al. (2020) Biodiversity initiatives Carvajal et al. (2022) Carbon performance : carbon reduction initiatives Haque (2017) Corporate greenhouse emissions Hollindale et al. (2019) Environmental sustainability Kassinis et al. (2016) Carbon performance Nuber & Velte (2021) + Renewable energy alliances Post et al. (2015) Women on boards 0 Environmental performance Birindelli et al.(2019); Hussain et al. (2018); Nguyen et al. (2021) Page 21 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 22 - Environmental performance Walls et al. (2012) Environmental performance Dixon-Fowler et al. (2017); García Martín & Herrero (2020); Hussain et al. (2018); Orazalin (2020); Orazalin, & Mahmood (2021); Radu & Smaili (2021); Walls et al. (2012) Environmental CSR Uyar et al. (2020) Board sustainability committee + Environmental strength/concerns Burke et al. (2019) Empirical results: + implies a positive relationship between the board composition dimension and the outcome; - implies a negative relationship between the board composition dimension and the outcome and 0 implies a nonsignificant relationship between the board composition dimension and the outcome. Page 22 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 23 Table 2. Descriptive statistics and calibration Descriptive Statistics Condition/Outcome Description Year n Mean SD Min. Max. Calibration 2014 51 61.73 11.40 24.73 76.03 2015 49 59.40 11.73 29.18 74.78 2016 54 62.91 10.11 32.69 84.17 2017 53 62.84 9.63 30.06 82.96 2018 50 65.64 10.17 34.42 83.56 ECC performance The 0-100 rating of ECC performance 2019 53 64.84 12.69 31.62 83.56 Full membership = 0.95 Maximum ambiguity = 0.50 Full non-membership = 0.05 2014 51 12.65 2.61 8.00 18.00 2015 49 12.49 2.51 8.00 18.00 2016 54 12.07 2.99 5.00 18.00 2017 53 11.83 3.06 4.00 18.00 2018 50 11.90 2.80 4.00 18.00 Board size Number of board members 2019 53 11.87 2.68 4.00 17.00 Full membership = 15 (CNMV, 2020) Maximum ambiguity = 12 Full non-membership = 5 (CNMV, 2020) 2014 51 0.43 0.18 0.00 0.76 2015 49 0.45 0.15 0.15 0.77 2016 54 0.48 0.16 0.15 0.85 2017 53 0.49 0.17 0.15 1.00 2018 50 0.48 0.16 0.15 1.00 Board independence Percentage of independent directors on the board 2019 53 0.48 0.17 0.15 1.00 Full membership = 0.66 (CNMV, 2020) Maximum ambiguity = 0.50 (CNMV, 2020) Full non-membership = 0.33 (CNMV, 2020) 2014 51 0.69 0.47 0.00 1.00 2015 49 0.67 0.47 0.00 1.00 2016 54 0.69 0.47 0.00 1.00 2017 53 0.66 0.48 0.00 1.00 2018 50 0.62 0.49 0.00 1.00 Duality Dummy variable (1=CEO is the chair; 0=CE0 is not chair) 2019 53 0.57 0.50 0.00 1.00 Full membership = 1 Full non-membership = 0 2014 51 8.46 3.39 2.67 18.3 2015 49 8.13 2.98 2.20 15.00 2016 54 7.90 3.02 1.13 14.89 2017 53 7.77 3.26 1.40 17.25 2018 50 7.66 3.39 1.83 15.18 Board tenure The average number of years on the board 2019 53 7.39 3.12 1.00 14.63 Full membership = 0.95 Maximum ambiguity = 0.50 Full non-membership = 0.05 2014 51 0.09 0.14 0.00 0.56 2015 49 0.10 0.15 0.00 0.50 2016 54 0.08 0.14 0.00 0.50 2017 53 0.08 0.14 0.00 0.56 2018 50 0.08 0.12 0.00 0.38 Family on boards Percentage of family members directors on the board 2019 53 0.08 0.13 0.00 0.38 Full membership = 0 Maximum ambiguity = 0.1 Full non-membership = 0.5 2014 51 0.16 0.11 0.00 0.50 2015 49 0.17 0.11 0.00 0.42 2016 54 0.18 0.10 0.00 0.40 2017 53 0.21 0.11 0.00 0.46 2018 50 0.22 0.11 0.00 0.50 Women on boards Percentage of women directors on the board 2019 53 0.25 0.11 0.00 0.50 Full membership = 0.95 Maximum ambiguity = 0.50 Full non-membership = 0.05 2014 51 0.10 0.30 0.00 1.00 2015 49 0.10 0.31 0.00 1.00 2016 54 0.13 0.34 0.00 1.00 2017 53 0.09 0.30 0.00 1.00 2018 50 0.06 0.24 0.00 1.00 CSR committee Dummy variable (1=board has a CSR committee; 0=board has no CSR committee) 2019 53 0.15 0.36 0.00 1.00 Full membership = 1 Full non-membership = 0 Page 23 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 24 Table 3. Correlation matrix Correlation 1 2 3 4 5 6 7 Board size Board independence -.169** Duality .153** 0.055 Board tenure -0.009 -.262** 0.071 Family on boards -.114* -0.084 -0.035 .313** Women on boards -0.009 0.077 -0.063 -0.007 -0.003 Sustainability committee .153** 0.062 0.057 -0.062 -0.008 0.068 ECC .182** .159** .194** -0.06 0.095 0.085 .153** ** Correlation is significant at a level of 0.01 (bilateral). * Correlation is significant at a level of 0.05 (bilateral). Page 24 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review Appendix 1. Prior studies on board composition and environmental sustainability Author (year) Outcome Board composition dimension (expected correlation/ empirical result) Theoretical approach Research setting Aguilera, R. v., Aragón-Correa, J. A., Marano, V., & Tashman, P. A. (2021). Academy of Management Journal Environmental sustainability Board size (+) Board independence (+) Environmental committee (+) Duality (-) Women on board (+) Agency theory, Resource dependence theory Literature review Aragón-Correa, J. A., Marcus, A. A., & Vogel, D. (2020). Academy of Management Annals Review of the literature Review of the literature Review of the literature Literature review Beji, R., Yousfi, O., Loukil, N., & Omri, A. (2021).. Journal of Business Ethics Environmental performance Board size (+/+) Board independence (+/0) Duality (-/-) Gender diversity (+/0) Resource dependence theory Agency theory Social categorization Upper echelons Stakeholder theory French listed companies Ben-Amar, W., Chang, M., & McIlkenny, P. (2017). Journal of Business Ethics Voluntary climate change disclosure Gender diversity (+/+) Non-duality (control/+) Board size (control/0) Board independence (control/0) Critical mass theory Canadian companies Berrone, P., Cruz, C., Gomez-Mejia, L. R., & Larraza-Kintana, M. (2010). Administrative Science Quarterly Environmental performance Family-controlled public firms (+/+) Board size (control/-) Socio-emotional wealth Institutional theory US companies Birindelli, G., Iannuzzi, A. P., & Savioli, M. (2019). Corporate Social Responsibility and Environmental Management Environmental performance Women on board (+/0) Critical mass theory Homophily Gender differences Listed banks in the EMEA (Europe, Middle East and Africa) Page 31 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review Author (year) Outcome Board composition dimension (expected correlation/ empirical result) Theoretical approach Research setting Burke, J. J., Hoitash, R., & Hoitash, U. (2019). Journal of Business Ethics Environmental strength/concerns Board sustainability committees (+/+) Board size (control/+) Board independence (control/+) Board tenure (control/0) Accountability Creating shared value US companies Carvajal, M., Nadeem, M., & Zaman, R. (2022). Business Strategy and the Environment Biodiversity initiatives Board gender diversity (+/+) Board size (control/0) Board independence (control/+) Duality (control/+) CSR committee (control/+) Upper echelons Gender socialization US companies Cordeiro, J. J., Profumo, G., & Tutore, I. (2020). Business Strategy and the Environment Environmental CSR performance Board gender diversity (+) Control variables non-executive (-) Resource dependence theory Socioemotional wealth Agency theory US companies Cosma, S., Schwizer, P., Nobile, L., & Leopizzi, R. (2021). Business Strategy and the Environment Environmental Protection Attitude Female directors (+/+) Board independence (+/+) Multi-theoretical framework Italy de Villiers, C., Naiker, V., & van Staden, C. J. (2011). Journal of Management Environmental performance Board independence (+/+) CEO-Chairperson duality (-/0) Board size (+/+) Director tenure (+/0) Agency theory Resource dependence theory US publicly traded firms Dixon-Fowler, H. R., Ellstrand, A. E., & Johnson, J. L. (2017). Journal of Business Ethics Corporate environmental performance Board environmental committees (+/+) Proportion of Outside Directors on the Board Environmental Committee (control/+) Agency theory Resource dependence theory Large US public companies Dou, J., Su, E., & Wang, S. (2019). Journal of Business Ethics Proactive environmental strategy Family ownership (+/+) Strategic reference point matrix Organizational identity Socioemotional wealth theory China companies Page 32 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review Author (year) Outcome Board composition dimension (expected correlation/ empirical result) Theoretical approach Research setting Elmagrhi, M. H., Ntim, C. G., Elamer, A. A., & Zhang, Q. (2019). Business Strategy and the Environment Environmental performance Board gender diversity (+/+) Board size (control/0) Multi-theoretical framework Chinese publicly listed corporations Endo, K. (2020). Business Strategy and the Environment Corporate environmental performance Board size (+/+) Outside directors (+/+) Family firms (+/0) Agency theory Resource dependence theory Japanese listed corporations Galletta, S., Mazzù, S., Naciti, V., & Vermiglio, C. (2022). Corporate Social Responsibility and Environmental Management Environmental performance Proportion of female director (+/+) Board size (control/0) Agency theory Resource dependence theory Banks from 48 countries García Martín, C. J., & Herrero, B. (2020). Corporate Social Responsibility and Environmental Management Environmental performance Gender diversity (+/+) Board independence (+/0) Board size (+/0) Duality (-/0) CSR committee (+/+) Agency theory Stakeholder theory European Union–based companies Haque, F. (2017). The British Accounting Review Carbon performance: carbon reduction initiatives Board independence (+/+) Board gender diversity (+/+) CEO-chair separation (control/0) Board size (control/0) CSR committee (control/+) Agency theory Resource dependence theory Non-financial UK companies Helfaya, A., & Moussa, T. (2017). Business Strategy and the Environment Corporate environmental sustainability disclosure Board Independence (+/+) Board Gender Diversity (+/+) CSR Committee (+/+) CEO duality (control/0) Multi-theoretical framework Legitimacy theory Resource dependence theory Stakeholder theory Companies listed on the UK FTSE 100 Hollindale, J., Kent, P., Routledge, J., & Chapple, L. (2019). Accounting & Finance, 59(1), 277–308. Corporate greenhouse gas emissions Women on board (+/+) Board independence (control/+) CEO/board chair (control/-) Environmental committee (control/+) Institutional theory Board capital theory Australian listed companies Page 33 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review Author (year) Outcome Board composition dimension (expected correlation/ empirical result) Theoretical approach Research setting Hussain, N., Rigoni, U., & Orij, R. P. (2018). Journal of Business Ethics Environmental sustainability performance Board size (-/0) CEO duality (-/-) Board independence (+/+) Women on the Board (+/0) Sustainability Committee (+/+) Agency theory Stakeholder theory US-based companies Kassinis, G., & Vafeas, N. (2002). Strategic Management Journal Environmental litigation Board size (0/+) Stakeholder theory US Kassinis, G., Panayiotou, A., Dimou, A., & Katsifaraki, G. (2016). Corporate Social Responsibility and Environmental Management Environmental sustainability Gender diversity (+/+) N/A US publicly traded companies Li, J., Zhao, F., Chen, S., Jiang, W., Liu, T., & Shi, S. (2017). Business Strategy and the Environment Firms’ Environmental Policy Gender diversity (+/+) Percentage of outside directors (control/0) Upper echelons US listed companies Lu, J., Herremans, I. M., Jing Lu, C., & Lang, G. S. (2019). Business Strategy and the Environment Environmental performance Board gender diversity (+/+) Board size (control/+) Resource dependence theory US S&P 1500 composite index Ludwig, P., & Sassen, R. (2022). Journal of Environmental Management. Corporate sustainability Board independence (+) Board size (+) Gender diversity (+) Sustainability committee (+) Agency theory Stakeholder theory Systematic review from a sample of 56 articles Martínez-Ferrero, J., Lozano, M. B., & Vivas, M. (2021). Corporate Social Responsibility and Environmental Management Sustainability performance CSR committee (mediating role/+) Board size (control/-) Board independence (control/-) N/A Argentina, Brazil, Chile, Mexico Memili, E., Fang, H. C., Koç, B., Yildirim- Öktem, Ö., & Sonmez, S. (2018). Journal of Sustainable Tourism Sustainability practices Family ownership (-/-) Socioemotional wealth theory Members of the Turkish tourism and hospitality sector Page 34 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review Author (year) Outcome Board composition dimension (expected correlation/ empirical result) Theoretical approach Research setting Nadeem, M., Gyapong, E., & Ahmed, A. (2020). Business Strategy and the Environment Environmental value creation Board gender diversity (+/+) Board size (control/OLS+FE0) Board independence (control/OLSFE+) Duality (control/0) Stakeholder theory UK listed companies Nguyen, T. H. H., Elmagrhi, M. H., Ntim, C. G., & Wu, Y. (2021). Business Strategy and the Environment Environmental performance Board independence (+/0) Board size (+/+) Gender diversity (+/0) Agency theory Resource dependence theory Stakeholder theory Legitimacy Chinese companies from heavily polluting industries Nuber, C., & Velte, P. (2021). Business Strategy and the Environment Carbon performance Board gender diversity (+/+) Board independence (control/+) Sustainability committee (control/0) Duality (control/0) Legitimacy Critical mass theory European non-financial companies Orazalin, N. (2020). Business Strategy and the Environment Corporate environmental performance (independent variable) Board sustainability committee (+/+) Multi-theoretical perspective: Resource dependence theory Stakeholder theory Upper echelons UK listed companies Orazalin, N., & Baydauletov, M. (2020). Corporate Social Responsibility and Environmental Management Environmental performance Board Gender diversity (moderating role/+) Multi-theoretical approach: Upper echelons Resource dependence theory European listed Orazalin, N., & Mahmood, M. (2021). Business Strategy and the Environment Environmental performance Board independence (+/-) Board size (+/0) Board gender diversity (+/+) CSR sustainability committee (+/+) Agency theory Resource dependence theory Institutional theory Europe Page 35 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review Author (year) Outcome Board composition dimension (expected correlation/ empirical result) Theoretical approach Research setting Post, C., Rahman, N., & McQuillen, C. (2015). Journal of Business Ethics Renewable energy alliances Female Representation on Boards (+/+) Independent Director Representation (+/+) Upper echelons Resource dependence theory Agency theory US gas companies Post, C., Rahman, N., & Rubow, E. (2011). Business & Society Environmental corporate social responsibility Outside directors (+/+) Women on board (Critical mass three or more +/+ environmental strengths) Duality (control/0) Board size (control/0) N/A Fortune 1000 companies 2006 Radu, C., & Smaili, N. (2021). Journal of Business Ethics Environmental performance CSR committee (+/+) Board size (control/0) Board independence (control/0) Board gender diversity (control/0) CEO duality (control/-) Stakeholder theory Governance bundle Canadian companies Uyar, A., Kilic, M., Koseoglu, M. A., Kuzey, C., & Karaman, A. S. (2020). Tourism Management Perspectives Environmental CSR Non-executive board members (+/0) Board gender diversity (+/+) CSR Sustainability committee (+/+) CEO duality (control/0) Boar size(control/0) Resource dependence theory Upper echelons Hospitality and tourism industry companies from 150 countries Walls, J. L., Berrone, P., & Phan, P. H. (2012). Strategic Management Journal Environmental performance, results for concerns Board size (no direction/+) Board independence (no direction/-) Board gender diversity (no direction/-) CEO duality (no direction/0) Environmental committee (no direction/+) N/A Standard & Poor's (S&P) 500 companies from the primary and manufacturing industries Page 36 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review Appendix 2. Necessity analysis. High ECC Low ECC Year Condition Consistency Coverage Consistency Coverage Board size 0.79 0.70 0.79 0.55 ~Board size 0.49 0.75 0.56 0.68 Board independence 0.50 0.74 0.47 0.54 ~Board independence 0.69 0.63 0.77 0.55 Duality 0.75 0.61 0.60 0.39 ~Duality 0.25 0.45 0.40 0.55 Board tenure 0.68 0.81 0.66 0.61 ~Board tenure 0.68 0.72 0.79 0.66 Family on board 0.30 0.73 0.28 0.53 ~Family on board 0.81 0.59 0.86 0.49 Women on board 0.63 0.76 0.66 0.62 ~Women on board 0.68 0.72 0.74 0.61 Sustainability committee 0.13 0.75 0.06 0.25 2014 ~Sustainability committee 0.87 0.54 0.94 0.46 Board size 0.79 0.61 0.73 0.64 ~Board size 0.53 0.63 0.55 0.75 Board independence 0.55 0.66 0.47 0.64 ~Board independence 0.70 0.54 0.75 0.65 Duality 0.69 0.51 0.59 0.49 ~Duality 0.31 0.40 0.41 0.60 Board tenure 0.63 0.64 0.67 0.77 ~Board tenure 0.77 0.68 0.68 0.68 Family on board 0.29 0.58 0.31 0.72 ~Family on board 0.86 0.53 0.82 0.57 Women on board 0.73 0.69 0.60 0.64 ~Women on board 0.62 0.58 0.71 0.75 Sustainability committee 0.15 0.68 0.06 0.32 2015 ~Sustainability committee 0.85 0.44 0.94 0.56 Board size 0.74 0.68 0.77 0.58 ~Board size 0.55 0.74 0.58 0.65 Board independence 0.62 0.76 0.58 0.58 ~Board independence 0.66 0.66 0.76 0.62 Duality 0.68 0.57 0.63 0.43 ~Duality 0.32 0.51 0.37 0.49 Board tenure 0.64 0.74 0.71 0.68 ~Board tenure 0.72 0.75 0.73 0.62 Family on board 0.32 0.78 0.27 0.53 ~Family on board 0.81 0.57 0.89 0.52 Women on board 0.71 0.77 0.69 0.62 ~Women on board 0.65 0.72 0.75 0.68 Sustainability committee 0.16 0.69 0.09 0.31 2016 ~Sustainability committee 0.84 0.53 0.91 0.47 Board size 0.76 0.67 0.76 0.65 ~Board size 0.61 0.72 0.62 0.71 Board independence 0.65 0.69 0.58 0.61 ~Board independence 0.63 0.61 0.71 0.67 Duality 0.71 0.56 0.58 0.44 2017 ~Duality 0.29 0.41 0.42 0.59 Page 37 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review High ECC Low ECC Year Condition Consistency Coverage Consistency Coverage Board tenure 0.72 0.73 0.71 0.70 ~Board tenure 0.71 0.71 0.73 0.72 Family on board 0.31 0.72 0.27 0.62 ~Family on board 0.84 0.54 0.88 0.55 Women on board 0.74 0.73 0.72 0.69 ~Women on board 0.68 0.71 0.72 0.73 Sustainability committee 0.09 0.51 0.09 0.49 ~Sustainability committee 0.91 0.50 0.91 0.50 Board size 0.77 0.72 0.7 0.58 ~Board size 0.55 0.68 0.67 0.72 Board independence 0.63 0.76 0.55 0.58 ~Board independence 0.65 0.62 0.77 0.65 Duality 0.63 0.55 0.57 0.45 ~Duality 0.37 0.50 0.43 0.50 Board tenure 0.67 0.73 0.68 0.66 ~Board tenure 0.69 0.71 0.72 0.66 Family on board 0.31 0.77 0.24 0.54 ~Family on board 0.82 0.55 0.90 0.53 Women on board 0.69 0.73 0.74 0.69 ~Women on board 0.70 0.75 0.71 0.67 Sustainability committee 0.06 0.54 0.06 0.46 2018 ~Sustainability committee 0.94 0.53 0.94 0.47 Board size 0.77 0.71 0.68 0.57 ~Board size 0.53 0.65 0.66 0.72 Board independence 0.62 0.75 0.49 0.53 ~Board independence 0.61 0.57 0.77 0.64 Duality 0.62 0.58 0.50 0.42 ~Duality 0.38 0.46 0.50 0.54 Board tenure 0.66 0.72 0.65 0.64 ~Board tenure 0.67 0.68 0.72 0.65 Family on board 0.31 0.76 0.22 0.49 ~Family on board 0.79 0.53 0.89 0.54 Women on board 0.69 0.71 0.72 0.66 ~Women on board 0.67 0.73 0.69 0.67 Sustainability committee 0.19 0.67 0.10 0.33 2019 ~Sustainability committee 0.81 0.50 0.90 0.50 Energy and Climate Change (ECC) performance. “~” indicates absence of the condition. Page 38 of 38 http://mc.manuscriptcentral.com/bse Business Strategy and the Environment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60