The importance of board diversity and network centrality in ESG data

This paper aims to identify some of the determinants of firm performance on social and environmental issues. Specifically, we look at the effects of corporate boards’ gender diversity and of corporate directors’ social networks as captured by network centrality measures. We focus on a sample of Italian-listed companies over the period 2010–2020 and find evidence of a positive relationship between gender diversity and a firm’s Environmental (E) and Social (S) scores, suggesting that social and environmental responsibility is higher when there are more women on the corporate board. As to board members’ social networks, network centrality measures appear to be positively linked to the E and S scores. This information is valuable not only to the company itself but also to policymakers who are interested in improving firms’ environmental and social performance.