Harnessing Board Sustainability Expertise for Corporate Sustainability: Unveiling the Influence of Gender Diversity and Compensation

As businesses increasingly integrate sustainability into their strategic objectives, corporate governance has emerged as a critical enabler of Environmental, Social, and Governance (ESG) performance. This study investigates the underexplored interplay between board sustainability expertise, gender diversity, and board compensation in driving corporate sustainability. Drawing on a sample of 112 publicly listed companies from 2014 to 2023, this study employs a two-step system Generalized Method of Moments (GMM) to empirically examine these relationships. The findings depict that board sustainability experience significantly enhances corporate sustainability by signaling a strong commitment to long-term ESG goals, thereby enhancing stakeholders' trust and corporate legitimacy. Gender diversity and board compensation enhance sustainability-related decision-making by promoting diverse perspectives and financial incentives in motivating directors to effectively utilize their expertise. These insights contribute to the corporate governance literature by emphasizing the strategic value of sustainability-focused board structures and offering practical guidance for firms seeking to enhance their ESG performance.