This paper aims to investigate the impact of several governance mechanisms, including board meetings, board independence, board gender diversity, chief executive officer (CEO) duality, sustainability committees and environmental, social and governance (ESG)-based compensation, on corporate carbon emission performance.
This study draws a sample of 414 companies listed in the STOXX Europe 600 index, spanning the period from 2017 to 2023. The main findings were derived using the feasible generalized least squares method. Additionally, a generalized method of moments analysis was conducted to assess the robustness of these results.
The results show that board meetings, board gender diversity and CEO duality are associated with better carbon performance (i.e. reducing carbon emissions). However, board independence, sustainability committee and ESG-linked compensation were found to increase carbon emissions levels, contrary to expectations.
Thus, this study first provides new empirical evidence on the relationship between corporate governance mechanisms and carbon performance in the European Union market. Second, it provides useful insights for regulators, investors and corporate executives.
