1 Introduction

Sustainability remains a fundamental issue for organizations, and developing sustainable strategies, which requires integrating environmental, social, and governance (ESG) activities into business, as well as communicating these aspects, has become a major challenge for firms (Gull et al. 2023b). Yet, firms can tackle stakeholders’ expectations in a variety of ways and literature has increasingly stressed the need to distinguish between substantive and symbolic ESG strategies (Rodrigue et al. 2013; Miras-Rodríguez et al. 2020; García-Sánchez et al. 2021). Whereas the former occurs when companies align sustainable strategies and processes with the expectations of stakeholders –and actually commit to ESG issues– the latter aims to positively impact stakeholders’ perceptions, misleading them into believing the firm is fulfilling their expectations when there is no real commitment (Michelon et al. 2015). The current unprecedented pressure on firms to comply with expectations regarding sustainability aspects may give rise to the spread of symbolic ESG strategies, thereby creating a gap between ESG reporting and ESG commitment (Ruiz-Blanco et al. 2022; Lassoued and Khanchel 2023).

Symbolic ESG strategies have major negative consequences for financial markets and call into question the transparency and credibility of ESG information, which is specifically one implicit objective of regulatory reforms on sustainability reporting. As a result, symbolic ESG constitutes a major concern for politicians (European Commission 2022) and professional bodies (Deloitte 2022; Ernst and Young 2022). Academics have also discussed this issue and recent literature on sustainability remarks that the gap between reporting and commitment can hold harmful effects for firms and backfire in the long run, leading to a reduction in corporate reputation (Miras-Rodríguez et al. 2020), purchase intention (Uyar et al. 2020), cost of capital and access to finance (García-Sánchez et al. 2021), as well as market valuation (Du 2015; Hawn and Iannou 2016). In this scenario, understanding how external factors and corporate characteristics affect symbolic ESG strategies remains a key issue, despite which the empirical evidence is still limited (Gull et al. 2023b). Several studies have documented that symbolic ESG strategies can be determined by external pressures from governments (Marquis and Qian 2014; Luo et al. 2017), the institutional environment (Cho et al. 2015), regulations (Kim and Lyon 2015), stakeholders (Jamali et al. 2017), or analysts (Zhang et al. 2022). Nonetheless, little is known about the influence of internal characteristics –particularly corporate governance mechanisms. In this regard, a wave of criticism has emerged concerning the role of the board in sustainability strategies, since they sit at the top of the decision-making tree and emerge as a key governing body within firms vis-à-vis developing initiatives related to ESG (Godos-Díez et al. 2018; Ramon-Llorens et al. 2019; Endrikat et al. 2020; Bolourian et al. 2021). However, the impact of directors in symbolic ESG strategies remains underexplored. Only a few emerging studies have focused on how CEO characteristics (Sauerwald and Su 2019; Shahab et al. 2022; Gull et al. 2023a), board independence (Yu et al. 2020), board gender diversity (Eliwa et al. 2023), and sustainability committees (Gull et al. 2023b) affect the substantive or symbolic nature of sustainability strategies.

Our paper aims to fill this gap by exploring the effect of one key board characteristic –multiple directorshipsFootnote 1– on the substantive/symbolic nature of ESG strategy by considering the connection between ESG reporting and ESG commitment. In addition, we look at whether the effect of multiple directorships may differ in firms from socially and environmentally sensitive industries.

The debate concerning the advantages and disadvantages of multiple directorships has been embraced by regulators and practitioners alike (European Commission 2011; Institutional Shareholder Services 2022), and most corporate governance codes all over the world recommend a limitation on the number of directorships. However, in the academic field, empirical evidence is inconclusive and research insists on the need to elucidate the strengths and weaknesses of multiple directorships (Ferris et al. 2020; Dwekat et al. 2022; Latif et al. 2023). In the context of sustainability, this topic has been gaining attention over the last few years, and previous research has examined the impact of multiple directorships on either reporting or commitment. On the one side, studies into the effect of this board characteristic on sustainability reporting have mainly been confined to suggesting that certain specific interlocks increase the likelihood of issuing sustainability reports (Sun et al. 2020; Liang et al. 2022), or that multiple directorships improve the content of these reports (Rupley et al. 2012; Ong and Djajadikerta 2018; Maswadi and Amran 2023) or the adoption of the Global Reporting Initiative guidelines (Reguera-Alvarado and Bravo-Urquiza 2022). On the other side, empirical evidence concerning the effects of multiple directorships on ESG commitment remains inconclusive (Barka and Dardour 2015; Ortiz-de-Mandojana and Aragon-Correa 2015; Al-Dah 2019; García-Martín and Herrero 2020; Rubino and Napoli 2020).

Our paper differs from previous studies, since we consider both ESG reporting and commitment jointly, and we examine whether multiple directorships lead firms to a symbolic or substantive ESG strategy. Unlike most previous studies, ESG reporting has been measured by ESG web-accessibility, which has proven pivotal vis-à-vis enhancing sustainability disclosure prominence and the impact of ESG communication (López-Arceiz et al. 2018; Chong and Rahman 2020; Georgiadou and Nickerson 2020), especially in the current context where the internet has become critical in managing the relationship between firm and stakeholder (Matuszak and Różańska 2019). Our results highlight that multiple directorships lead to a symbolic ESG strategy, which is most evident in socially and environmentally sensitive industries. These findings contribute to the literature in several ways.

First, although understanding the relationship between boards and sustainability strategies has been a popular topic for years, our findings advocate the idea that a more nuanced approach of this relation is needed in order to really comprehend what impact boards have. Our paper reinforces the academic debates concerning the need for empirical research to focus on the symbolic/substantive role directors play in ESG strategies (Sauerwald and Su 2019; Gull et al. 2023b; Shahab et al. 2022). In the current context, this becomes especially relevant, as the growing demands for firms and their boards to strengthen ESG reporting have inevitably raised a key unresolved issue concerning whether boards embody symbolic ESG strategies (Meng et al. 2019; Eliwa et al. 2023). In addition, the recent scandals leave room to believe that there is a gap between ESG reporting and ESG commitment (Lassoued and Khanchel 2023). Indeed, studying ESG reporting without considering actual ESG commitment may lead to inconclusive research results regarding boards’ decisions on sustainability matters. In particular, we align with the idea regarding the possibility of ESG web-accessibility being used to mislead stakeholders (Chong and Rahman 2020), which opens the door to exploring specific information attributes beyond the content of sustainability reports in order to gain a clearer picture of ESG reporting.

Second, our findings add to the existing literature on multiple directorships by providing evidence about the ethical and economic implications of this board characteristic. This is particularly relevant as, despite corporate governance reformers worldwide having taken concerns related to multiple directorships seriously, more empirical evidence is needed to understand their influence on ESG strategies (Latif et al. 2023). While prior research has examined the impact of multiple directorships on either ESG reporting or ESG commitment, our paper connects the two and demonstrates that boards with multiple directorships engage in symbolic ESG strategies by enhancing ESG reporting without actually intensifying their ESG commitment, thus leading to unethical behaviour or ineffective corporate governance mechanisms (Baselga et al. 2018; Latif et al. 2020). Our study thus contributes directly to the aforementioned debates regarding the role of multiple directorships in decisions concerning sustainability and also helps to explain whether board members with multiple directorships add value to firms in terms of sustainable development, which also proves relevant for firms and policy-makers.

Third, our evidence contributes to the ongoing discussions concerning whether firms in socially and environmentally sensitive industries are more likely to implement substantive or symbolic ESG strategies (Emma and Jennifer 2021; Ruiz-Blanco et al. 2022). In particular, we align with the stream of literature which argues that these industries put more pressure on directors to disclose ESG information even though this might mean engaging in symbolic ESG strategies (Eliwa et al. 2023; Gull et al. 2023a). These findings can help to resolve previous inconclusive results in their links to sustainability (Ortiz-de-Mandojana and Aragon-Correa 2015; Endrikat et al. 2020) and recommend future research considering –from both a theoretical and a methodological view– that the role of boards in ESG decisions depends on the context, and remains specifically contingent on industry characteristics.

The structure of the paper is as follows. In Sect. 2, the theoretical framework is reviewed and the main hypotheses are formulated. Section 3 explains the sample, the variables, and the methodology. Section 4 reports the results, and Sect. 5 summarizes the main conclusions.

2 Theoretical framework

Parallel to the growing regulatory emphasis on board member requirements, the academic debate about how specific director characteristics may shape decisions concerning sustainability has intensified enormously, despite which the question remains an open issue (Bolourian et al. 2021). In particular, multiple directorships have gained interest as an important determinant of organizational outcome, and two different points of view have generally been employed in the literature on multiple directorships: the expertise hypothesis, underpinned by the resource dependence theory; and the busyness hypothesis, based on the agency theory (Lee and Lee 2014; Bravo and Reguera-Alvarado 2017; Ferris et al. 2020; Latif et al. 2020). In the sustainability field, several emerging studies have analysed what role this board characteristic plays in ESG reporting, as well as in ESG commitment, and these two theoretical approaches remain key to understanding the expected relationships.

The literature addressing multiple directorships and ESG reporting has mainly been based on the expertise hypothesis. Previous studies highlight that serving on multiple boards provides directors with valuable resources, such as knowledge, experience, or access to information (Rupley et al. 2012), which leads to a wider perspective on ESG reporting issues (Ong et al. 2018). These directors improve the link between a firm and its business environment and can better handle environmental and social reporting challenges (Ramon-Llorens et al. 2019) as well as increase the awareness of the need for superior ESG reporting practices so as to gain competitive advantage (Reguera-Alvarado and Bravo-Urquiza 2022). In addition, interlocking directorates facilitate the adoption of ESG reporting initiatives, since they serve as conduits for relevant resources on the implementation of disclosure policies (Brown et al. 2019). Although still incipient, previous studies into this relation agree that multiple directorships extend the content of ESG disclosures within annual reports or sustainability reports (Rupley et al. 2012; Ong and Djajadikerta 2018), positively affect sustainability reporting by adopting GRI guidelines and external assurance of ESG information (Reguera-Alvarado and Bravo-Urquiza 2022), or that specific director interlock can increase the likelihood of publishing sustainability reports (Sun et al. 2020; Liang et al. 2022).

On the other hand, research on multiple directorships and ESG commitment offers some room for doubt. The expertise hypothesis suggests that serving on different directorships helps to reduce uncertainty and to provide a great opportunity to acquire valuable skills and knowledge about ESG challenges (Lu et al. 2021). In particular, multiple directorships offer directors a convenient channel to obtain relevant information and to manage external dependencies in gaining access to critical resources on ESG practices and also help boards to manage a more diverse range of stakeholders’ demands related to ESG initiatives (Haque 2017; Ding et al. 2022). However, the literature emphasizes that these resources may be insufficient for implementing actual ESG actions, which may also require a great degree of monitoring. While ESG reporting strategies are relatively easy to implement and offer a short way to immediately address stakeholders’ expectations (Matuszak and Różańska 2019), developing ESG actions demands ongoing commitments as well as considering complex technological and regulatory issues (Haque 2017), and involves high uncertainty about future returns (Shabana and Ravlin 2016; Khoo et al. 2022). ESG actions are therefore inherently long-term, may entail higher costs and organizational burdens (Miska et al. 2018; Al-Dah 2019; Liang et al. 2022), and are subject to substantial agency costs and high levels of monitoring (Jiraporn and Chintrakarn 2013). In this regard, the busyness hypothesis points out that multiple directorships decrease the time available for board members to attend and prepare meetings (Carpenter and Westphal 2001), thereby hindering coordination (Jiraporn et al. 2009) and the ability to dedicate sufficient time to analysing the issues for every board with the required depth (Kor and Sundaramurthy 2008). Directors thus become overburdened and unable to perform all of their ESG duties effectively, especially those related with ESG actions that imply greater risk and that are likely to demand greater monitoring skills (Haque 2017; Khoo et al. 2022). Precisely, board monitoring effectiveness remains crucial in the engagement of ESG actions (Lee 2023). Accordingly, although many studies have documented a positive effect of multiple directorships on the adoption of sustainable initiatives (Walls and Hoffman 2013; Lu et al. 2021; Ding et al. 2022), some papers have suggested that multiple directorships might only have a positive effect on ESG commitment under certain circumstances (Ortiz-de-Mandojana and Aragon-Correa 2015; Al-Dah 2019), while others have found an inconsistent relation (Barka and Dardour 2015; Rubino and Napoli 2020) or a negative relation with different measures for ESG commitment (Mallin and Michelon 2011; Haque 2017; García-Martín and Herrero 2020).

Our paper aligns with recent research which considers that both the expertise effect and the busyness effect are complementary, and that one effect may prevail depending on the context (Clements et al. 2015; Le et al. 2023). In line with the previously mentioned research, we advocate that the role of the busyness hypothesis is stronger in decisions related to actual ESG actions and, particularly, that the lack of sufficient monitoring abilities may make boards lapse into symbolic ESG strategies (Gull et al. 2023b). Our arguments are thus close to other studies which have suggested that directors with multiple directorships focus their effort on decisions that require less monitoring, even though this may lead to unethical behaviours (Baselga et al. 2018; Latif et al. 2020). These directors, who tend to be powerful and visible, may increase ESG reporting, even though this might –albeit unintentionally– lead to symbolic ESG strategies aimed at protecting their image and might only appear to fulfil stakeholders’ expectations (Fich and Shivdasani 2006). Although this topic remains unexplored in the literature, a few prior studies do point out that directors who are more visible, such as CEOs, may be short-sighted and lead to symbolic ESG in an effort to protect a desirable self-image (Shahab et al. 2022).

Taking into consideration the previous theoretical arguments, we posit that multiple board directorships enhance ESG reporting initiatives, without positively impacting ESG commitment. Hence, the following hypothesis is formulated:

H1: A higher number of multiple board directorships leads to symbolic ESG strategies.

In addition, our paper aligns with the recent literature emphasising that the role of boards may vary depending on the context (Endrikat et al. 2020). In particular, the effects of multiple directorships can be conditional on firm environment (Lee and Lee 2014; Ortiz-de-Mandojana and Aragon-Correa 2015). In this regard, our study examines whether the symbolic or substantive influence of multiple directorships on ESG strategies differs in socially and environmentally sensitive industries, where the external pressures firms are greater, which may significantly affect the way ESG issues are managed (Gull et al. 2023b).

The role of socially and environmentally sensitive industries in addressing the unprecedented challenges concerning sustainability has been the focus of recent research, which has stressed the need to ascertain whether firms in these industries engage in substantive or symbolic ESG strategies (Emma and Jennifer 2021; Ruiz-Blanco et al. 2022). Firms in socially and environmentally sensitive industries are subject to greater pressure to maintain sustainable development, and they need to live up to society’s expectations regarding ESG within the industry (Böhling et al. 2019). However, the approach of these firms to sustainability matters remains unclear, as they have reasons for either a substantive or a symbolic ESG strategy. On the one hand, these companies can decide to carry out a substantive ESG strategy to improve their legitimacy, reduce risk and information asymmetry, and attract investors (Emma and Jennifer 2021). Firms operating in socially and environmentally sensitive industries may engage in substantive ESG strategies as they are exposed to substantial scrutiny from stakeholders, who may recognize their ESG practices (Zaiane and Ellouze 2022). Therefore, substantive ESG strategies can become an opportunity for these firms to increase transparency and to project a positive image (Cai et al. 2012; Hamza and Jarboui 2021). On the other hand, these firms may be prone to implement ESG reporting initiatives as an immediate response to intense regulatory pressures (Meng et al. 2019) and –due to the need to seek legitimacy– adopt more active ESG reporting initiatives so as to distinguish themselves from competitors (Eliwa et al. 2023). Such reporting may go a step further than actual ESG commitment (Michelon et al. 2015). In this context, some studies have suggested that companies assume a certain degree of naivety amongst stakeholders and argue that these firms may often be tempted to employ symbolic ESG strategies (Cho et al. 2012; Rodrigue et al. 2013).

In the case of multiple directorships, the pressures concerning sustainability might accentuate the symbolic approach within socially and environmentally sensitive industries, albeit unconsciously. On the one side, board interlocks would increase directors’ awareness towards ESG reporting and their response to ESG reporting concerns, thus protecting their self-image. Therefore, the reaction of boards with multiple directorships in terms of ESG reporting –which is much easier than actual ESG commitment– is likely to be stronger in these industries. In contrast, implementing ESG actions requires the oversight and control of complex factors, and the lack of sufficient monitoring skills of boards with a high number of directorships remains a handicap. In conclusion, the disconnect between ESG reporting and ESG commitment can be expected to be accentuated in socially and environmentally sensitive industries when the number of board directorships is greater. The following hypothesis is therefore formulated:

H2: A higher number of multiple board directorships leads to greater symbolic ESG management in socially and environmentally sensitive industries.

Figure 1 presents a graphical representation of our theoretical framework.

Fig. 1
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Theoretical model

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3 Empirical design

3.1 Data and sample

Our sample is made up of firms listed on the Madrid Stock Exchange for 2012–2022. Choosing Spanish companies offers an interesting setting because Spain is one of the leading countries in sustainability initiatives (KPMG 2020). Given that there were missing observations because of the lack of available data, mainly regarding ESG scores, and also related to corporate governance variables and firm-specific variables, the final sample comprises an unbalanced setting of 584 observations for 73 companies. This sample is deemed representative, as these firms represent most of the Spanish stock exchange’s capitalization (Tejedo-Romero and Araujo 2020).

In order to guarantee the comparability and reliability of the results, the design of the main variables of our study relies on recognized sources in previous studies. First, information regarding the directorships of board members, as well as other information about boards of directors, was extracted from the BoardEx database, which provides extensive biographical information of boards of directors in major public firms. Second, information concerning ESG commitment was compiled from the LSEG Eikon database, as well as financial data. Third, information about web-accessibility of ESG reporting was obtained from the database “Informe Reporta” released by DEVAFootnote 2. This database annually provides four rankings to assess the quality of the information disclosed by Spanish firms from stakeholders’ perspective: transparency, commitment, relevance and accessibility. These rankings consider criteria that have been highlighted in the ESG reporting recommendations issued by AA1000 Accountability, the Dow Jones Sustainability Index (DJSI), FTSE4Good, the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Sustainability Accounting Standards Board (SASB), and UN Global Compact, and have been validated with information users (analysts, investors, and media). The initial analysis to obtain these rankings has been conducted by a team of independent analysts, experienced in the fields of reporting and sustainability. The procedure has been supervised by a group of experts and professionals in the reporting field. These rankings are annually elaborated and have become a reference in Spain, being valued by media, companies, and academics (Bravo and Reguera-Alvarado 2019).

3.2 Variables

3.2.1 Dependent variables

In order to capture the substantive or symbolic nature of ESG strategies, measures for ESG reporting and ESG commitment are required. First, we design a variable for web-accessibility of ESG reporting (ESGreporting), considering from each corresponding year of interest the annual accessibility ranking provided by the Informe Reporta published by DEVA. This ranking contemplates whether access to ESG information is clear and easy for stakeholders, including four indicators that rely on the availability and usability of this information. Each indicator has its own definition and assessment guidelines within a homogeneous measurement scale ranging from non-existent to comprehensive.

Second, in line with the previous literature (Cheng et al. 2014; Landi et al. 2022), the main variable for ESG commitment (ESGcommitment) is measured, from each corresponding year of interest, through the annual ESG scores from LSEG EikonFootnote 3. These scores measure ESG commitment across three main dimensions that cover specific themes: environmental (resource use, emissions, and innovation), social (workforce, human rights, community, and product responsibility), and governance (management, shareholders, and CSR strategy). Despite being widely accepted in previous research, there were some firms from our sample with missing values in ESG scores. Therefore, as a robustness analysis in order to minimize potential bias of unavailable data, ESG commitment was also measured by the ranking MERCO responsibility ESG, which assesses all listed firms in Spain in terms of their commitment with ESG. This measure has been used in the previous literature (Gras-Gil et al. 2016; Palacios-Manzano et al. 2021) and is independently audited by one of the big four in accordance with the ISAE 3000 standard. The method used is based on a multi-stakeholder assessment, including managers, ESG experts, financial analysts, consumer associations, and labour unions, among others. The assessment is based on the commitment of firms with environment and climate change, with community, employees, diversity policies, consumers, business ethics and governance, among other issues related to ESG.

Our dependent variables, which measure for substantive/symbolic ESG strategies, jointly consider the values of the variables ESGreporting and ESGcommitment. Following the method proposed in recent research (Miras-Rodríguez et al. 2020; Ginder et al. 2021), both ESG reporting and ESG commitment range from “low” to “high” and four scenarios can be considered (see Fig. 2). These positions lead to the creation of specific variables: (1) apathetic ESG strategy (ApatheticESG) takes the value of one if a firm’s level of ESG web-accessibility is lower than the median value for our sample and ESG commitment is higher than the median, and zero otherwise; (2) discreet ESG strategy (DiscreetESG) takes the value of one if a firm’s level of ESG web-accessibility is lower than the median value for our sample and ESG commitment is lower than the median, and zero otherwise; (3) substantive ESG strategy (SubstantiveESG) takes the value of one if a firm’s level of ESG web-accessibility exceeds the median value for our sample and ESG commitment is higher than the median, and zero otherwise; (4) symbolic ESG strategy (SymbolicESG) takes the value of one if a firm’s level of ESG web-accessibility exceeds the median value for our sample and ESG commitment is lower than the median, and zero otherwise.

Fig. 2
figure 2

Scenarios for ESG strategies

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In addition, in order to perform a more in-depth analysis of symbolic ESG strategies, two additional measures are designed. First, SymbolicESG_moderate takes the value of one if ESG reporting ranges between the median and the 75th percentile for our sample and ESG commitment is lower than the median. Second, SymbolicESG_intense takes the value of one if ESG reporting ranges between the 75th percentile and the maximum for our sample and ESG commitment is lower than the median.

3.2.2 Independent variables and control variables

In line with previous studies (Lee and Lee 2014; Bravo and Reguera-Alvarado 2017; Latif et al. 2020; Cooper and Uzun 2022), two variables are used on an annual basis to measure multiple board directorships. First, the percentage of busy directors (BUSY) –those who hold two or more outside directorships– is considered. Second, the average number of outside boards on which directors sit in the same year (DIRECTORSHIPS) is also included. In order to prevent any measurement error, we consider firms both inside and outside our sample (Sarkar and Sarkar 2009).

Consistent with previous literature on sustainability reporting (Pucheta-Martínez and Gallego-Álvarez 2019; Arayssi et al. 2020), several control variables are included in our study. Three board-related variables are incorporated: board size, board independence, and board gender diversity. Board size (BSIZE) is computed by the total number of directors on the board and only full-time board members are included. Board independence (BINDEP) is calculated by the proportion of independent directors on the board and, for that, independence is considered in line with the criteria established by every firm. Board gender diversity (BGENDER) is measured by means of a Blau indexFootnote 4. Two firm-level variables are also considered: firm size, and socially/environmentally sensitive industry. Firm size (ASSET) is calculated as the logarithm of total assets. As regards the industry (SECTOR), a dichotomous variable that takes the value of one if the company belongs to a socially or environmentally sensitive industry, and zero otherwise, is included (Birkey et al. 2016). Specifically, a firm is classified in a socially or environmentally sensitive industry if its primary operations are in any of the following sectors: chemical, paper, metals, petroleum, mining and extractive, and utility industries. Moreover, in order to control for the temporal effect, a dichotomous variable is considered, which takes the value 1 for the period 2018–2022, where corporate sustainability reporting was subject to the Spanish Law 11/2018, and 0 otherwise.

Table 1 provides a summary of the variables and their definitions.

Table 1 Description of variables
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3.3 Empirical analysis

Our empirical analysis tests the effect of multiple board directorships on ESG strategies. The general model used to test our hypothesis is presented in Eq. 1, where β0 is the intercept and β is the coefficient of each independent variable. The sub index i identifies the individual, the sub-index t identifies the time, and εit the error term. Considering the dichotomous nature of the dependent variables, a logit panel data estimation model is employed.

$$\begin{array}{l}Dependent\;variables\; = \;{\beta _0}\; + \;{\beta _1}{\rm{BUS}}{{\rm{Y}}_{{\rm{i,t}}}}\; + \;{\beta _2}{\rm{BSIZ}}{{\rm{E}}_{{\rm{i,t}}}}\;{\rm{ + }}\\\;{\beta _3}{\rm{BINDE}}{{\rm{P}}_{{\rm{i,t}}}}\; + \;{\beta _4}{\rm{BGENDE}}{{\rm{R}}_{{\rm{i,t}}}}\; + \;{\beta _5}{\rm{ASSE}}{{\rm{T}}_{{\rm{i,t}}}}\;\\ + \;{\beta _6}{\rm{SECTO}}{{\rm{R}}_{{\rm{i,t}}}}\; + \;{\beta _7}{\rm{TEMPORAL}}\;{\rm{EFFEC}}{{\rm{T}}_{{\rm{i,t}}}}\; + \;{\varepsilon _{{\rm{i,t}}}}\end{array}$$
(1)

Our empirical approach consists of three stages. In the first stage, we examine whether multiple directorships have a substantive or a symbolic effect on ESG strategies. To that end, we analyse how multiple directorships might affect ESG strategies globally, considering the matrix that reflects four possibilities for these strategies. Therefore, the four dependent variables are ApatheticESG, DiscreetESG, SubstantiveESG, and SymbolicESG. The main analysis is performed through a logit estimation that includes the variable BUSY for all the models. However, in order to guarantee the reliability of our results, two robustness tests are performed: on the one hand, the variable DIRECTORSHIPS is alternatively considered; on the other hand, all the models are also performed by using a probit estimation for the main independent variable (BUSY). These approaches allow us to effectively control for possible unobserved heterogeneity and for serial correlation in the error term. In order to avoid potential endogeneity concerns (Harford et al. 2008; Chhaochharia et al. 2012; Liu 2018), we have lagged the independent variable in both the logit and the probit approachFootnote 5.

In the second stage, we perform a number of additional tests to explore in greater depth the association between multiple directorships and symbolic ESG strategies. In this regard, the two additional measures for symbolic ESG strategies (SymbolicESG_moderate and SymbolicESG_intense) are employed. Again, the main analysis is carried out by a logit estimation including the variable BUSY, and two robustness tests are performed, by considering the variable DIRECTORSHIPS, as well as through a probit estimation for the main independent variable (BUSY).

Third, moderation analysis is performed by including an interactive variable for our measures for multiple directorships and our measure for socially and environmentally sensitive industries. This analysis is also replicated by using a probit estimation.

4 Empirical results

4.1 Descriptive statistics and bivariate correlations

Table 2 reports the descriptive statistics of all the variables for the whole sample. Our results point out that 21.9% of the firms in our sample engage in symbolic ESG strategies, while 29.4% adopt a substantive approach. The percentage of firms that carry out discreet ESG strategies remains at 28.1%, with 20.6% of firms evidencing an apathetic approach. In relation to the main explanatory variables, the average value of BUSY is 0.387, while the average value for DIRECTORSHIPS is 1.599, which is consistent to that reported by previous studies (Lee and Lee 2014; Latif et al. 2020; Cooper and Uzun 2022). As for board-related variables, boards are composed of about ten members on average, the vast majority of whom are independent directors (around 82%) and male, since female directors are clearly underrepresented (the mean value for the Blau index is 0.33).

Table 2 Descriptive statistics
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Table 3 shows the correlation coefficients and VIF values in order to rule out multicollinearity in our sample, which is an important assumption in statistical analysis. In particular, the literature generally considers multicollinearity to be a problem if the correlation between the independent variables is higher than 0.7 (Cooper and Schindler 2003). Although the correlation coefficients are below 0.7, we compute the variance inflation factor (VIF) to test the lack of multicollinearity in our estimates. Given that a lack of multicollinearity is broadly accepted when VIF values are below 5 (Studenmund 1997), we determine that multicollinearity is not an issue with our sample.

Table 3 Correlation matrix
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4.2 Multivariate analysis

With regard to hypothesis H1, the results are presented in Tables 4 and 5. As regards Table 4, the dependent variables are ApatheticESG, DiscreetESG, SubstantiveESG, and SymbolicESG. Our findings highlight that multiple directorships are positively associated to SymbolicESG. In other words, the likelihood of symbolic ESG strategies increases for a high number of board directorships. These results remain the same for the two measures for multiple directorships and for the probit estimation. In line with theoretical arguments, these results thus suggest that higher values of directorships lead to enhanced web-accessibility of ESG reporting but that they have no actual effect on ESG commitment. In sum, our findings support hypothesis H1.

Table 4 Effect of board multiple directorships on ESG strategies
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Table 5 Effect of board multiple directorships on symbolic ESG strategies
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In addition, a more detailed analysis of the relationship between multiple directorships and symbolic ESG strategies is reported in Table 5, where SymbolicESG_moderate and SymbolicESG_intense are included as dependent variables. These findings reveal that a higher number of board directorships leads to significant symbolic ESG strategies, regardless of the intensity of this symbolism, and they provide additional support for hypothesis H1.

As for our hypothesis H2, Table 6 shows that, for the main analysis, there is a positive moderating effect of socially and environmentally sensitive industries on the influence of multiple board directorships on symbolic ESG strategies. This result is also illustrated in Fig. 3. The results remain consistent for the probit estimation. Therefore, hypothesis H2 can be accepted.

Table 6 Moderating effect of socially/environmentally sensitive industries
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Fig. 3
figure 3

Moderating effect of SECTOR on the relation between board multiple directorships and SymbolicESG Note 95% confidence interval for (i) Low SymbolicESG - Low BUSY: [0.032;0.306], (ii) Low SymbolicESG - High BUSY: [-0.005;0.017], (iii) High SymbolicESG - Low BUSY: [0.108;0.601], (iv) High SymbolicESG - High BUSY: [0.156;0.931]

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Finally, all the analyses have been run using the ranking MERCO responsibility ESG to measure ESG commitment, and the results remains constant and support our hypotheses (see Annex 1: Tables A1,A2 and A3).

Table A1 Annex 1. Robustness analysis using MERCO responsibility ESG
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Table A2 Effect of board multiple directorships on symbolic ESG strategies (with MERCO data)
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Table A3 Moderating effect of socially/environmentally sensitive industries (with MERCO data)
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4.3 Discussion

Given the ever-increasing importance of sustainability in business, understanding how boards manage ESG strategies proves vital for all economic agents (Arayssi et al. 2020). Our results suggest that, while multiple directorships lead to enhanced ESG reporting practices in response to stakeholders’ concerns, board members with a high number of directorships may prove to be a handicap when seeking to improve actual ESG actions. Specifically, our paper extends previous research in several ways.

First, we complement the literature addressing the link between boards of directors and ESG strategies (Pucheta-Martínez and Gallego-Álvarez 2019; Arayssi et al. 2020; Bolourian et al. 2021). Our results align with the stream of literature suggesting that recent governance failures, as well as social and environmental excesses, have put additional pressure on boards of directors to develop sustainable business strategies (Jain and Jamali 2016; Arayssi et al. 2020). In the current context, the ever-increasing pressures that firms are under to disclose ESG information may tempt boards to adopt symbolic ESG strategies (Michelon et al. 2015). Specifically, our evidence contributes to the incipient research addressing the impact of boards of directors on the substantive or symbolic nature of sustainability strategies (Sauerwald and Su 2019; Yu et al. 2020; Shahab et al. 2021; Gull et al. 2023b; Shahab et al. 2022; Eliwa et al. 2023).

Second, we extend recent academic debates regarding how multiple board directorships deal with the environmental and social challenges faced by firms (Ramón-Llorens et al. 2019). In this regard, while previous studies have generally focused on the impact of interlocking directorates on sustainability reports (Ong and Djajadikerta 2018; Sun et al. 2020; Liang et al. 2022), our findings reveal a positive effect of multiple board directorships on ESG web-accessibility, which is a critical information attribute in sustainability communication policies nowadays (Chong and Rahman 2020; Georgiadou and Nickerson 2020). As expected, multiple directorships can enhance the strategic vision of board members, boost their awareness of the need to address stakeholders’ expectations regarding this information, and serve as conduits for valuable information trends (Ortiz-de-Mandojana and Aragon-Correa 2015; Brown et al. 2019). More importantly, our results also highlight that the effect of multiple directorships on firms’ actual ESG commitment remains insignificant, suggesting that an excessive number of directorships might be a form of irresponsible behaviour, since busy board members may not perform all of their duties effectively (Latif et al. 2020). In this regard, our evidence reinforces the premise that multiple directorships may prove to be harmful and may actually lead to weaker corporate governance (Lee and Lee 2014), by adopting opportunistic and symbolic ESG strategies. In particular, our evidence supports previous findings which claim that more than two outside directorships may be a threshold for considering a board as busy (Ferris et al. 2020).

Third, our findings significantly extend research on sustainability, since ESG reporting remains a trending busyness strategy and, particularly, web-accessibility of ESG information may represent a pivotal attribute to improve the prominence of ESG reporting practices (López-Arceiz et al. 2018; Georgiadou and Nickerson 2020). Our paper provides fresh evidence concerning how this ESG reporting attribute may be shaped by boards and, at the same time, reinforces the idea that web-based features of ESG reporting may be an easier alternative to address stakeholders’ concerns and be used in a symbolic way. ESG information accessibility can easily constitute a means for firms to engage in symbolic ESG strategies in order to impact stakeholders’ perceptions at a low cost (Chong and Rahman 2020). Therefore, our evidence also strongly advocates that ESG reporting practices cannot be analysed in isolation but that a broader approach is required in order to ascertain the link between ESG reporting and ESG commitment. The study of symbolic ESG strategies is undoubtedly a major topic in recent research, which has increasingly considered them to have important ethical and economic consequences (López-Arceiz et al. 2020; Miras-Rodríguez et al. 2020; Uyar et al. 2020; Ginder et al. 2021).

Fourth, our findings are also consistent with the recent stream of research which supports the idea that contextual approaches are required to better comprehend the influence of directors on ESG decisions (Ortiz-de-Mandojana and Aragon-Correa 2015; Endrikat et al. 2020). In particular, we extend previous literature by demonstrating that the social and environmental sensitivity of industries significantly moderates the influence of multiple directorships on symbolic ESG strategies. This evidence is consistent with the arguments which suggest that ESG reporting is strategic and symbolic, particularly in the presence of external pressures (Meng et al. 2019). This is especially relevant in sensitive industries, where firms may be tempted to enhance their ESG reporting over their actual ESG commitment (Cho et al. 2012; Eliwa et al. 2023; Gull et al. 2023a).

5 Conclusions

The advantages and disadvantages of interlocking directorates have become a controversial issue and are increasingly being discussed by regulators, professionals, and academics alike. At the same time, ESG strategies have emerged as a fundamental issue in sustainable development of firms. Given the importance of both boards of directors and ESG, as well as the significant consequences of symbolic ESG strategies, our paper has direct implications for firms, regulators, professionals, and researchers alike.

First, our evidence allows firms to understand how multiple board directorships, as well as other board characteristics, impact the substantive/symbolic approach to ESG strategies. A growing number of companies are concerned about their ESG practices and may be interested in business cases that can actually help them to improve their accountability in this field. At the same time, firms are paying ever-increasing attention to board structure. Therefore, our results would prove helpful for these firms in the selection of board members. Particularly, shareholders should be more vigilant to boards in those firms from socially and environmentally industries. Our findings also have managerial implications, since firms need to be aware that intensifying ESG reporting practices may be counterproductive if this reporting is merely symbolic in nature. Given the consequences of symbolic behaviour, this implies both ethical as well as economic concerns for firms. (Table A2).

Second, international professional bodies and policy-makers have recommended or imposed restrictions on the number of directorships that board members can hold at any one time. In the aftermath of a number of major corporate governance scandals in recent years, our findings represent a relevant business case in terms of both refining legislation as well as providing recommendations for regulators and practitioners. Our evidence also informs regulatory bodies by showing the risks of considering ESG reporting policies in isolation and points to the need to exert supervisory mechanisms to prevent symbolic ESG strategies. It is particularly important to be aware that the behaviour of directors regarding sustainability decisions may be strongly conditioned by external pressures in those firms operating in socially and environmentally sensitive industries. (Table A3).

Third, from an academic standpoint, our paper emphasizes the need to examine ESG reporting practices simultaneously with firms’ overall ESG actions in order to obtain a more accurate picture of how boards influence ESG strategies. Moreover, as regards the multiple board directorship phenomenon, our study reinforces the idea that the experience effect and the busyness effect should not be considered as mutually exclusive, but that their prevalence may depend on the type of decision that boards take. In addition, our findings contribute to the academic debate regarding the need to take into account the context in which directors take their decisions, as well as exploring new information attributes to understand better how ESG reporting may be used symbolically.

This paper evidences some limitations which may be taken into consideration when pursuing future research. First, although Spain offers a suitable context to explore corporate governance mechanisms and ESG reporting, future studies might examine different legal and/or institutional contexts, given that boards’ influence may vary depending on the context. In addition, our sample is confined to large listed firms. The small differences in terms of the size of the firms in our sample can also be considered a limitation. Future research into this topic might therefore also look at small and medium enterprises. Another interesting issue might involve exploring the effect of specific interlocks or switching board members among companies in ESG strategies. Moreover, our paper focuses on one particular feature of ESG reporting. In an effort to obtain wider-ranging evidence, scholars might also explore other information attributes and examine specific characteristics of board members who hold multiple directorships and other moderating factors. Finally, it is relevant to acknowledge that LSEG Eikon ESG scores partially include corporate reporting aspects, which may be a limitation of this type of study.