Diversity in boardrooms and ESG performance. Evidence from Italy and Spain

Purpose Corporate boards represent a key component of corporate governance, responsible for guiding the firm’s strategies, overseeing senior management and serving as a communication channel with shareholders. This study aims to focus on the effect of gender and cultural diversity in corporate boards on environmental, social and governance (ESG) outcomes applied to the largest Spanish and Italian companies. Design/methodology/approach This study uses a panel data model with random effects to evaluate the relationship between board diversity and corporate sustainability performance, as measured by the ESG score. The sample consists of 3,510 observations (1,398 from Spain and 2,112 from Italy), obtained from the Thomson Reuters database in the period 2017–2022. Findings The results of the panel data model with random effects confirm the relevance of board diversity as a key factor for improving corporate sustainability performance, albeit with specific nuances depending on the national context. Research limitations/implications This study is not without limitations, which presents opportunities for future research. The reliance on self-reported ESG data introduces potential biases, and the focus on two European countries constrains the generalizability of the findings to other regions. Practical implications Practical implications rely on enhancing cultural and economic frameworks and providing a nuanced context for analyzing how diverse boards shape corporate sustainability in Southern Europe. Originality/value The selection of these countries offers a well-suited combination of shared and distinctive characteristics, making them valuable case studies for examining the influence of board diversity on ESG performance.