Board characteristics and ESG performance. Evidence from the European utilities sector

Purpose – This paper aims to inspect the influence of board characteristics on environmental, social and governance (ESG) performance in the utilities sector. The study investigates the impact of a comprehensive set of board characteristics [i.e. board size, gender diversity, board independence, chief executive officer (CEO) duality and corporate social responsibility (CSR)/sustainability committee] on the ESG performance score. Design/methodology/approach – The authors analyzed a sample of 119 listed utility companies for the period 2018–2024 and the authors developed an econometric model applying unbalanced panel data regression with firm fixed effects and controls per year. To test the research hypotheses, the authors measured ESG dimensions by using the ESG score provided by Eikon Refinitiv database. Findings – Findings prove that board size, board independence and the presence of a specific CSR/ sustainability committee positively impact on ESG performance. Also, the relationship between genderbalanced board of directors (BoDs) and ESG performance is positive and statistically significant, once a critical mass of women is reached on BoD. The study would inspire utility companies to define the internal governance mechanisms thoroughly, giving prime attention to an accurate choice of the BoDs’ members. Research limitations/implications – This study has implications for practitioners, policymakers and regulators in designing specific ESG mechanisms for utilities. From a managerial perspective, the study also provides insights on how to improve ESG performance through a comprehensive set of specific board characteristics. Originality/value – This paper offers an in-depth examination of the CG practices of utility companies, and it attempts to bridge the gap in prior literature on the determinants of ESG issues in the European utilities industry. To the best of the authors’ knowledge, this is the first study that investigates the relationship between the board diversity and the ESG dimensions measured by the Refinitiv Eikon score.