Do Directors Drive Corporate Sustainability?

We use the exposure of U.S. firms’ directors to the staggered introduction of sustainability disclosure reforms in foreign countries to study the role of the board of directors in shaping corporate sustainability. Using a difference-in-differences design, we document that the board has a strong impact on U.S. firms’ sustainability disclosure and performance. We also find that boards weigh the costs and benefits when implementing sustainability changes considering firms’ financial risks and the costs of sustainability improvements. The boards’ CSR expertise matters: firms exposed to sustainability shocks have greater subsequent firm performance and greater capital and labor productivity