CEO Characteristics and Environmental Performance: Evidence from Indonesian Banks

Abstract

Following the paradigm shift of company performance, from merely financial aspects to the balance between economics and environmental aspects, a study that explores the drivers of company environmental performance is indispensable. This study aims to empirically examine the role of CEO characteristics in determining the environmental performance from CEO's gender, age, expertise, and international experience in Indonesian banks. We use secondary data from banks' annual and sustainability reports that were analysed using panel data regression. The results demonstrate that CEO's international experience and education level positively affect bank's environmental performance while foreign CEO and CEO's abroad study exhibit negative effect. Our findings emphasise that CEO plays a great role in initiating banks' environmental activities. CEO's decision is crucial to adopt environmental practice that leads to better environmental performance. The study contributes to the Indonesian literature by providing empirical evidence of CEO factors in determining banks' environmental performance, in which there are very limited studies examining the role of CEO. We also suggest the Indonesian Financial Service Authority to encourage banks to deliver higher environmental contribution by maximizing the role of CEO.