Board Management Characteristics and Financial Outcomes in Sustainability-Oriented European Companies

Achieving long-term company financial performance requires strategic initiatives on the part of board management that can stimulate the sustainable development of companies through green strategies and eco-innovation. The research conducted in this study aims to identify the impact of executive management on financial performance based on the achievement of the sustainable development framework within European companies operating in various industries. An advanced empirical analysis was configured on a cross-sectional dataset based on 4.219 European companies, which was collected for the period of the 2022 fiscal year, considering dimensions such as corporate governance, sustainability, and financial performance. The methodological endeavor was founded on several modern econometric techniques, namely Generalized Structural Equation Modeling (GSEM) and Bayesian Network Analysis through Gaussian Graphical Models (GGMs). The main results highlight that companies having well-structured board management and corporate governance policies aligned with the SDGs facilitates the transition to sustainable economic models, enhancing financial performance, innovations, and long-term sustainable growth. Furthermore, policies should be tailored to emphasize the importance of optimal board management size and continuous professional training for human capital involved in sustainable activities, thus enhancing long-term financial performance.