Abstract
We examine whether and how environmental, social, and governance (ESG) committees in the board of directors contribute to corporate ESG performance. Based on a sample of A-share listed companies in China’s Shanghai and Shenzhen stock markets from 2010 to 2021, we find that firms with ESG committees are associated with higher corporate ESG performance. We also find that this effect is partly transmitted through the channels of the increase in environmental investment and attraction of investor attention. Further analysis indicates that this association is more significant in non-state-owned enterprises (NSOEs) and polluting industries. Our findings imply that institutional arrangements and designs to enhance corporate ESG performance through board governance are effective rather than symbolic.
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