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Journal of Business Ethics

, Volume 154, Issue 4, pp 1161–1186 | Cite as

The Heterogeneity of Board-Level Sustainability Committees and Corporate Social Performance

  • Jenna J. BurkeEmail author
  • Rani Hoitash
  • Udi Hoitash
Original Paper

Abstract

This paper explores an increasingly prevalent element of board-level commitment to sustainability. We propose a theoretical framework under which the existence and associated actions of board-level sustainability committees are motivated by shared value creation, where the interests of a diverse group of stakeholders are satisfied and sufficient profit is achieved. Using hand-collected data, we find that sustainability committees are heterogeneous in focus and vary in their effectiveness. Specifically, we disaggregate the sustainability committee construct based on stakeholder group focus (i.e., community, employee, environment, and consumer/supplier) and find that associations between sustainability committees and performance outcomes are stronger when committees focused on a specific stakeholder group are paired with relevant performance outcomes. We generally find that sustainability committees are effective at impacting relevant strengths, but do not mitigate relevant concerns. These results are consistent with the shared value framework, where committees both generate value by pursuing sustainability-related opportunities and protect value by monitoring, but not necessarily mitigating sustainability-related risks. Univariate tests suggest that effective committees are also larger, more independent, and meet more frequently. Finally, we propose a new method to classify industries based on their sensitivity to certain stakeholder groups and find that the effectiveness of committees focused on specific stakeholders is more pronounced in industries that are sensitive to these stakeholders.

Keywords

Sustainability governance Environmental committee Corporate social performance Voluntary accountability Shared value creation Sustainability risk management 

Abbreviations

CSP

Corporate social performance

MSCI

MSCI ESG STATS database

OLS

Ordinary least squares

ROA

Return on assets

SIC

Standard industrial classification

Notes

Acknowledgements

We thank seminar participants at Bentley University for their insightful comments. Jenna Burke is also grateful for financial support from the Harold S. Geneen Institute of Corporate Governance at Bentley University.

Compliance with Ethical Standards

Conflict of interest

Jenna J. Burke, Rani Hoitash and Udi Hoitash declare that they have no conflict of interest.

Ethical Approval

This article does not contain any studies with human participants or animals performed by any of the authors.

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Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  1. 1.University of Colorado DenverDenverUSA
  2. 2.Bentley UniversityWalthamUSA
  3. 3.Northeastern UniversityBostonUSA

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