By Jan Endrikat, Charl De Villiers, Thomas Guenther, & Edeltraud Guenther

Companies’ operations affect the natural environment and the society we live in and, unfortunately, their effects are not always positive. Sure, they provide employment and goods and services for their customers, but some of them also degrade our shared natural resources and affect their employees and customers in negative ways. Increasingly, companies are expected to demonstrate social responsibility, often labelled corporate social responsibility (CSR). CSR has become so important that it is now expected by investors and it ranks among companies’ strategic priorities. And that is why boards of directors get involved in CSR – it is of strategic importance. Boards affect corporate strategy and decision-making through monitoring of management and resource provision, making their knowledge, skills and networks available.

We know boards pay attention to CSR, but what do we really know about boards’ influence over CSR? Although an increasing number of studies examine this matter, the results of these studies are not always consistent. However, we can figure out which results we can really believe in by combining the different results and applying statistical techniques called meta-analytics. Our meta-analysis (Endrikat et al., 2021), recently published in Business & Society, combines findings from 82 prior studies, and goes beyond the simple models used in these studies. Our meta-analysis shows that boards affect CSR in more complex ways. For instance, companies with larger boards generally have better CSR. Also, companies with boards having more independent directors (directors who do not work for the company) and female members have improved CSR. Not only that, but the effect of larger, more independent, and more female boards is enhanced in companies that have a board committee tasked with CSR.

The meta-analysis also makes it clear that the influence of these board characteristics on CSR is different, depending on the norms and institutions of the company’s country of origin. For example, the positive effects of larger boards and more independent boards on CSR are more pronounced in countries that do not have good shareholder protection mechanisms, e.g., corporate disclosure requirements and avenues for shareholders to take legal action against companies. Of course, CSR includes both social and environmental aspects. As might be expected, the findings show that these dimensions are not influenced in the same way by board characteristics. For example, interestingly, the positive relationship between more women on boards and CSR is stronger for the social aspects, rather than the environmental aspects of CSR.

So which kinds of boards generally support better CSR? Boards with more directors on them, which include more independent directors and more women, and who appoint a CSR board committee – companies with such boards of directors tend to pursue more socially and environmentally friendly practices. This is a worthwhile goal, as better outcomes for the environment is good for all of us, as it affects our health and wellbeing. And better social outcomes, including for employees and customers, have similar benefits for the wellbeing of all of society.

Reference

Endrikat, J., De Villiers, C., Guenther, T. & Guenther, E. 2021. Board Characteristics and Corporate Social Responsibility: A Meta-Analytic Investigation, Business & Society, 60(8), 2099–2135. https://doi.org/10.1177/0007650320930638