Environmental performance factors: insights from CSR-linked compensation, committees, disclosure, targets, and board composition

Abstract

This research investigates the factors influencing Corporate Environmental Performance (CEP) using S&P 500 firm-level data spanning 2001-2022. Drawing on existing literature, the study argues that corporate environmental performance (CEP) is positively affected by certain corporate characteristics. Specifically, the study reveals that CSR-linked compensation, the presence of a CSR committee, disclosure policies, and environmental targets are positively associated with CEP. Furthermore, the study shows that the inclusion of independent directors and female board members can also lead to higher CEP scores. Additionally, the findings indicate that analyst coverage and network size are positively linked to CEP. Robustness tests, including 2SLS, subsample analysis, and alternative measures, provide further support for the primary conclusions. The study's results contribute to the growing body of research on the importance of corporate characteristics in promoting sustainable business practices.