Board effectiveness and corporate sustainability: diversity, cohesion and environmental concerns

Purpose The structure of the board of directors (BOD) plays a crucial role in assessing its effectiveness in promoting corporate sustainability. Nevertheless, the non-demographic attributes of BOD have been largely overlooked. This study seeks to investigate how personalized diversity and cohesion within the BOD influence board effectiveness (BE) and corporate sustainability performance (CSP), including economic performance (ECP), social performance (SP) and environmental performance (ENP), through the perspective of the stakeholder view of upper echelon theory (STUET). Furthermore, the study extends the theoretical framework by examining the moderating role of environmental teams (ET) in shaping these relationships. Design/methodology/approach This study uses a purposive sampling strategy to examine valid responses from 236 Chinese fireworks manufacturers. PLS-SEM analysis was utilized to verify the study’s eight hypotheses. Findings The analysis findings support the positive impact of BD and BC on BE and confirm that BE can promote improved ECP, SP and ENP, while BE mediates the effect of BD and BC on CSP. ET will positively strengthen the relationship between them. Practical implications Companies should prioritize both demographic and non-demographic diversity when assembling their board teams to enhance corporate governance across all sizes of companies. This approach aims to foster sustainable practices, particularly in highly polluting sectors like China’s fireworks industry. Originality/value This study employed the STUET to explain the characteristics of BOD that can affect CSP under the choking of stakeholder pressure. Furthermore, the moderating effect of ET is significant in influencing the relationship between them. Moreover, promoting the achievement of SDG 12 is crucial, as it directly supports the advancement of corporate sustainability.