Corporate governance and environmental responsibility

Abstract

As a key engine for continued global growth and job creation, tourism-related firms have long been identified as standing in contrast to the global policy momentum that aims to mitigate carbon emissions and enhance resource efficiency and social inclusiveness (United Nations Environment Programme, 2011). To become responsible entities, nowadays, tourism-related firms actively engage in corporate environmental responsibility (CER) activities to deal with their negative effects on the society in which they operate. Although the pressure exerted by external factors undoubtedly affects a firm’s CER practices, Sharma and Henriques (2005) point out that the corporate governance (CG) that drives firms should be analysed as it will reveal how firms understand CER and how they put it into practice. In this regard, understanding whether CG mechanisms improve CER is an issue of utmost importance as it might help in promoting and implementing environmental responsibility in organisations, which in turn will contribute to the sustainable development of firms. This study therefore aims to investigate the relation between CG and CER by empirically testing the impact of various CG mechanisms on firms’ CER in the tourism-related firms.