Does board industry expertise foster ESG strategy? The mediating role of environmental innovation

Abstract

Purpose

The study aims to empirically examine the effect of board industry expertise on environmental, social and governance (ESG) strategy, and the mediating role of environmental innovation.

Design/methodology/approach

Using an unbalanced sample of 341 publicly traded Italian non-financial firms and data collected from multiple sources over the period 2017–2021, this study applies single-mediator models via ordinary least squares regressions.

Findings

Results indicate that directors’ industry expertise improves the corporate orientation toward sustainability strategy that is reflected in ESG objectives. This effect is partly mediated by a greater level of environmental innovation.

Practical implications

The article suggests regulators to promote eco-innovation-friendly investment initiatives due to their value in advancing corporate sustainability strategies.

Originality/value

The research fills a gap in the literature that has never explored the effect of board industry expertise on sustainability-related outcomes. Moreover, it advances the debate on the implications of board human capital by assessing its influence on ESG strategy and environmental innovation.

Citation

della Corte, G., Ricci, F., Saggese, S. and Sarto, F. (2024), "Does board industry expertise foster ESG strategy? The mediating role of environmental innovation", Management Decision, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MD-10-2023-2009