Transforming companies through boards of directors

The business landscape has changed. The traditional objective of generating financial value for shareholders is no longer sufficient, since companies must create now sustainable long-term value for society. Contributing to a more sustainable world requires companies to integrate ESG initiatives into their strategies and decision-making processes. Ultimately, this means embedding the ESG principles within the organizational culture, which entails establishing a business model that includes all stakeholders, adopting a long-term commitment, and aligning all business objectives and activities with sustainability.

Ensuring this approach to sustainability requires a comprehensive and holistic vision, which turns the work of guiding companies in this new direction into a complex challenge. Given this profound shift in direction, companies need people capable of internalizing the ESG philosophy, creating an ESG culture, and implementing ESG strategies. In short, people who can navigate turbulent and changing waters, but with a clear destination on the horizon: creating sustainable value for all of society. And who are some of the people who can do this? The boards of directors.

Boards of directors are the primary mechanism of corporate governance, responsible for defining the company’s activities, establishing its strategies and building purpose-driven business models. We recognize that integrating ESG initiatives requires the commitment and participation of board members, and we firmly believe that the organization’s success depends on their capabilities and expertise. Based on these premises, this research evaluates the influence of board members' human capital (experience and knowledge) and social capital (networks) on ESG performance from a gender perspective.

Building a governance driven towards sustainability

To analyze the role of the corporate boards in ESG performance, we have considered the knowledge, experience, and networks (human and social capital) acquired by their members from two perspectives: externally, considering their activity on at least three different boards (variable ‘busy directors’); and internally, considering their tenure on the same board and in the same position (variable ‘tenure’). We also considered the presence of women on the board (variable ‘gender’).

We focused on companies listed on the NASDAQ-100, a stock market index comprised of the world's most innovative and forward-thinking companies. In other words, companies with the capacity to influence the business world and the potential to lead and drive a genuine transition to a more sustainable economy. To measure their ESG performance, two indicators were included: the ‘S&P Global Scores’ and the ‘Bloomberg ESG Scores’.

The best hands to hold the ESG compass

The results showed that the experience, knowledge, and networks that board members acquire externally through their participation on multiple boards improve ESG performance. Similarly, serving on the same board for years has also positive results, suggesting that board members can gain a deep internal understanding of the company and thus develop the long-term vision necessary for ESG strategies. However, the results also revealed some nuances, as years of service within the company or in the same board position showed a negative influence. This suggests that the experience and knowledge relevant to creating sustainable value come from participation in corporate governance rather than from professional career within the company or seniority in a specific board role.

Our results also have demonstrated that the presence of women on boards contributes positively to sustainable performance. Their greater sensitivity and commitment to the needs of others, as well as the diversity of knowledge and perspectives they provide to board decision-making are crucial to promoting corporate responsibility. However, when their presence is analyzed in conjunction with their participation on other boards or their tenure on the same board, ESG performance is negatively affected.  Therefore, our results seem to suggest that the inclusion of women on boards introduces changes traditional governance dynamics that still require an adaptation process, which for now reduces the positive effects on the sustainable performance of human and social capital.

All these results corroborate our initial assumptions: the human and social capital derived from board members is crucial for building purpose-oriented business models and maintaining the ESG compass.

Shedding light on the drivers to create sustainable value

Our research contributes to a deeper understanding of how corporate boards influence ESG performance. By analyzing the personal attributes and capabilities of board members, this research offers a broader perspective on the key drivers guiding companies toward sustainability. Our findings highlight the need to recognize the potential of board members to prioritize sustainability and create long-term value.

Corporate boards are crucial to creating sustainable value

The ESG compass is charting a new course for companies, and our research underscores the importance of board members, as those responsible for guiding this compass, to move towards sustainability. Designing boards that consider the capabilities of their members is key to creating sustainable value.

Read the full research:

Piñeiro-Chousa, J., López-Pérez, M. L., López-Cabarcos, M. Á., & Šević, A. (2025). Busy boards and environmental, social and governance performance: a gender perspective on NASDAQ-100 firms. Review Of Managerial Science, 19(12), 3663-3686. https://doi.org/10.1007/s11846-025-00863-4