Corporate Governance and ESG Scores: An Empirical Analysis of Board Attributes in Indian Non-Financial Firms

Abstract

Corporate sustainability and responsible business practices have gained prominence in recent years, with Environmental, Social, and Governance (ESG) performance emerging as a key metric to assess corporate commitment to sustainability and ethical governance. This study examines the relationship between corporate governance attributes and ESG performance in Indian non-financial firms. Specifically, it evaluates the impact of board gender diversity, board size, board background skills, and audit committee independence on ESG scores and its three components—environmental, social, and governance scores. Using panel data from 78 Indian firms spanning 2013–2024, the study employs fixed effect panel regression models to analyze these relationships. The findings shows that board gender diversity positively influences ESG performance, particularly governance scores, reinforcing the role of diverse leadership in ethical corporate decision-making. Audit committee independence significantly enhances governance transparency, while board size has mixed effects, improving social responsibility but reducing governance efficiency. Contrary to expectations, board background skills negatively impact ESG scores, suggesting a gap between traditional board expertise and sustainability integration. CEO duality and financial leverage negatively affect ESG scores, while firms with higher profitability tend to perform better in social initiatives. The study highlights the need for ESG-focused governance reforms and sustainability training for board members to improve corporate sustainability in emerging markets.