Green governance, sustainability reporting, and climate action: a systematic network analysis and evidence from the European Union

This thesis consists of three self-contained essays that delve into the realms of Corporate Sustainability and Environmental Finance. The thesis employs a systematic network analysis substantiated by empirical evidence from the European Union to provide particular insights on the characteristics of a "green" board that fosters sustainable practices within an organisation, advocating for transparent disclosure, and embracing accountability for performance.

The first essay (Chapter 2), titled "Environmental, Social, and Governance Disclosures and Environmental Performance: A Systematic Literature Network Analysis of Governance-Related Determinants," pursues a dual objective. Given the inconsistent findings in previous studies, the chapter aims to identify the development and gaps in empirical research regarding the relationship between corporate governance, specifically board attributes, and sustainability disclosures. This is achieved through a systematic review of influential publications among 330 papers published between 2003 and 2020. The chapter recognises four research streams assessing this relationship: (1) in Emerging Markets, (2) in Developed Countries, (3) from an Investor Perspective, or (4) as a Corporate Decision. Additionally, it outlines emerging research trends and future directions in this area. Furthermore, acknowledging the early narrative reviews that lacked substantial empirical evidence due to the nascent nature of the research field at that time, the chapter also analyses the main path of the research field on governance-related factors influencing environmental performance. This is based on a systematic review of influential publications among 63 papers published between 2017 and 2023. This analysis sheds light on the evolving research domain and provides guidance for the formulation of new research in this area.

In the second essay (Chapter 3), titled "Non-financial Reporting Harmonisation in Europe: An Empirical Analysis of the Influence of Board Characteristics," stakeholder theory is employed. The chapter utilises a quasi-experimental approach, leveraging the implementation of the European Union (EU) Directive 2014/95/EU, also known as the non-financial reporting directive (NFRD), in EU countries on January 1, 2017. This directive mandates enhanced disclosure of environmental, social, and governance (ESG) factors. The objective is to assess the impact of different board characteristics on the extent of disclosure and the effectiveness of the mandatory disclosure regulation. The findings indicate that larger boards, a higher representation of women on the board, and a greater proportion of independent directors contribute to higher levels of ESG disclosure. Moreover, the results confirm that sustainability disclosures improve following changes in the regulatory environment. The chapter holds implications for policymaking related to sustainability reporting regulation.

The motivation behind the third essay (Chapter 4), titled "Board Attributes Driving the Sustainable Reduction of Carbon Emissions: Evidence from Paris Climate Accords," is to provide evidence supporting the efficacy of the board in addressing environmental issues, offering new insights through the perspective of the stakeholder paradigm. The goal is to illuminate the role that corporate governance mechanisms and board dynamics play in addressing environmental and sustainability challenges. The chapter's findings, derived from an extensive panel dataset encompassing all European Union countries, suggest that companies with larger board sizes tend to exhibit higher actual carbon emissions. However, the results also confirm that the presence of women on the board may contribute to enhanced carbon performance by reducing carbon emissions. Furthermore, the chapter delves into the boards' commitment to addressing carbon risk, investigating the role played by boards in facilitating the implementation of climate-related regulation, specifically the Paris Agreement, with regard to firms' reduction of carbon emissions.