2024-01-10 18:56:21
More and more companies today are establishing “sustainability committees” to actively promote sustainable practices and report on these activities. These committees, appointed by the board of directors, are supposed to help organizations better align their true environmental performance. Their disclosures thus aim to reduce the involvement of companies in decoupling practicesdefined as the gap between what organizations communicate in terms of social and environmental performance and what they actually do.
However, some companies may set up sustainability committees that are purely symbolic or to give yourself a more responsible image among stakeholders. By investigating a global sample of companies from 37 countries, we have highlighted a significant negative association between the existence of a sustainability committee and environmental decoupling. Thus, the appointment of a committee does not seem to be sufficient to control the decoupling behavior of managers.
Exaggerated performances
In our research, we posited that the creation of a specialized sustainability committee improved the alignment between environment-related disclosure and actual environmental performance. In principle, the sustainability committee indeed acts first as an appropriate channel to control managerial discretion on sustainability issues, thus playing a decisive role in the effects of governance of the company.
However, in our sample, companies either exaggerate their sustainability performance to strengthen their legitimacyor underestimate their sustainable development activities in the reports in order to distract attention from possible costly initiatives. Therefore, a gap is created between sustainability disclosure and actual performance despite the existence of a sustainability committee.
However, this disconnect between practice and stated objectives in terms of social and environmental responsibility (CSR) can have disastrous impacts on the profitability and reputation of a company. The discrepancy, if revealed, can present significant costs to businesses, particularly when stakeholders external monitors CSR performance.
A question of gender
In our sample, however, we found that more independent and gender-diverse sustainability committees are effective in reducing the level of environmental decoupling. The results therefore offer implications for companies: they need to appoint more independent and female directors to sustainability committees.
Gender diversity on boards is particularly recognized for its positive impact on financial and non-financial results. Research suggests that the presence of women on boards improves CSR decision-making due to their social orientation. Norway was the first state to introduce legislation on gender quotas on corporate boards, a move aimed at addressing long-standing male dominance in the upper echelons of the corporate world.
In response to the global wave of promotion of gender equality, France introduced mandatory quotas in January 2011 to increase gender diversity on company boards. Under these quotas, French companies are required to appoint at least 40% women on their board of directors. So many measures which ultimately make it possible to correct the flaws in sustainability advice.
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