Corporate Social Responsibility Governance Systems: Catalysts for Sustainable Performance in London Stock Exchange Firms

ABSTRACT While much of the existing literature has examined the effects of traditional corporate governance on business outcomes such as financial and environmental performance, the influence of corporate social responsibility (CSR) governance systems on sustainable performance remains underexplored. Unlike traditional governance structures, CSR governance mechanisms are specifically designed to institutionalize sustainability, align stakeholder interests, and monitor socially responsible practices within organizations. This study addresses this gap by investigating how CSR governance systems shape sustainable performance. The analysis draws on data from 234 non‐financial firms listed on the London Stock Exchange between 2007 and 2024, obtained from the Bloomberg database. To test the hypothesized relationships, this study employed advanced econometric techniques, including augmented mean group (AMG) estimation, fixed effects with Driscoll–Kraay standard errors, and a two‐step generalized method of moments (GMM) approach. The results indicate that CSR governance mechanisms, specifically the presence of CSR‐focused non‐executive directors, the size and meeting frequency of CSR committees, and board gender diversity, exert a positive and significant influence on sustainable performance. Corporate leaders can draw on these insights to promote the establishment of independent positions and sustainability‐focused committees, thereby reinforcing accountability within existing legislation on sustainability reporting and governance frameworks. Such measures would enhance corporate responsibility by ensuring that firms remain accountable to society, rather than exclusively to shareholders.