Corporate Board Diversity on Environmental Sustainability Reporting of Listed Consumer Goods Firms in Nigeria

Abstract

The board of directors play an important role in corporate climate strategy-making and decisions but might also compromise environmental policies to minimize agency costs. This study critically investigates the effect of board diversity| on environmental sustainability reporting of listed consumer goods firms in Nigeria for 10 years (2011 to 2020). The study adopts an ex-post facto research design from a population of twenty (20) consumer goods firms listed on the Nigerian Exchange Group (NGX) as of December 31, 2020. Corporate board diversity was proxied by CEO nationality diversity, board gender diversity, and board of directors’ nationality diversity. Whereas environmental sustainability reporting was proxied by environmental sustainability disclosure. A sample of 16 firms were selected through purposive sampling techniques and data set which was sourced from published audited annual reports were analyzed using a binary logistic regression analysis approach. The results reveal that CEO nationality diversity and board of directors’ nationality diversity have a positive significant effect on environmental disclosure, whereas board gender diversity had a positive but insignificant effect on environmental disclosure suggesting that engagement of foreign CEOs can be leveraged in the determination of corporate goals that are associated with reducing the adverse effect of firm’s operation on the environment. The outcome is consistent with the stakeholders’ theory and reflects a sign of CEOs' commitment to the demands and interests of stakeholders. Given the foregoing, the study advocates policies that will accommodate hiring CEOs from different nationalities. When implemented, such policies will support environmentally friendly discussions and deliberations, which can translate to improved value for the firm. Such policy actions will be fundamental to maintaining good relationships with powerful stakeholders helping avoid undue pressure from stakeholders.