Creating value through diversity: Analysis of the strategic management of BoD diversity in favor of sustainable performance

In this article, we explore the impact of the characteristics of the Board of Directors (BoD) on environmental, social, and governance (ESG) performance for European listed companies and its evolution during the period 2018/2021. The purpose of this study is to understand if and how the BoD characteristics influence the ESG performance of the major listed companies in the EU before and after the COVID-19 breakthrough. The COVID-19 pandemic is taken as a reference point in time, considering that several studies show that, even in a health crisis with economic repercussions for the whole world, companies have continued to increase their commitment to ESG practices. The sample is composed of 600 European listed companies and covers the period from 2018 to 2021. The ESG score and the other variables are collected for all companies included in the STOXX 600 index (from the Refinitiv Workspace database) and analyzed using the ordinary least square (OLS) panel regression analysis at country and industry level covering the period 2018-2021. The results of our analysis show no significant relationship between BoD characteristics (in terms of gender diversity, cultural diversity, and special skills) and ESG performance in the pre-COVID-19 era. In the post-COVID-19 era, gender diversity is the only characteristic of the BoD, among those investigated, capable of influencing nonfinancial performance. This result, in line with the resource density theory, is justified by the increase in the average number of women in the BoD in the two-year period 2020-2021 compared to the previous one (2018-2019). We offer theoretical and practical implications to enhance ESG performance by combining BoD characteristics. We finally contribute to enhance the debate on the relevance of the BoD characteristics and ESG performance relationship providing consistent findings to emphasize the quality of the BoD for the ESG reporting and performance.