Journal Article

Women board members’ impact on ESG disclosure with environment and social dimensions: evidence from the European banking sector

Lagasio, Valentina, Gurol, Burcu

2023

Overview

Purpose This study aims to investigate the relationship between banks’ board structure and sustainability performance. Design/methodology/approach The empirical quantitative paper covers a sample of 35 European banks that are listed at the EUROSTOXX 600. Regression analysis techniques were used in the analyses. Findings Results indicate that board size, women ratio and independent directors ratio on board are positively and significantly related to environmental social governance (ESG), E and S disclosure scores. Also, we find that ESG disclosure is related to bank profitability. Practical implications Findings have implications for both policymakers and practitioners (bankers and investors). Large bank boards, which have women and independent members, could perform better in terms of ESG disclosure. The results also show that large banks and banks with high borrowing care more about sustainability. For banks to reach resources, they should perform well in terms of sustainability disclosure to their stakeholders. Social implications Banks should observe academic findings on corporate governance (CG) practices, which lead to a better ESG disclosure to structure their CG to improve at the best their disclosure policies: they should prefer larger boards with a high level of women and independence. In addition, we attach importance to the ESG performance of the banking sector due to its fund transfer functions. Banks transfer the deposits they collect to those in need of funds as loans. For this reason, it is important to which sector and which business they give credit. The importance of banks on ESG and their adoption of sustainability dimensions also affect their credit decisions. Originality/value This study examines the relationship between banks’ board structure variables and their effect on ESG, E and S scores separately. This study thinks that the G score can be a handicap for ESG-CG relations. Because chosen CG variables (women ratio, independent ratio, board size) affect G scores positively and can reason for positive ESG-CG relation. The environmental and social impact of women ratio, independent ratio and board size can be seen in this study.

• Publisher: Emerald Publishing Limited,Emerald Group Publishing Limited
• Subject: Annual reports / Banking / Banking industry / Banks / Boards of directors / Climate change / Corporate governance / Credit / Decision making / Disclosure / Economic crisis / Environmental governance / Environmental performance / Environmental social & governance / Females / Financial statements / Governance / Human capital / Investors / Loans / Policy making / Profitability / Regression analysis / Regulation of financial institutions / Social impact / Social responsibility / Society / Stakeholders / Stockholders / Sustainability / Sustainability reporting / Variables / Women