Unravelling the relationship among corporate sustainability initiatives, executive compensation and corporate carbon performance: new insights from African countries

Saa, Vida Y.; Morrison, Emmanuel A.; Adu, Douglas A.

Abstract

Purpose
Although listed firms in Africa are increasingly establishing board sustainability committees, their impact on corporate outcomes in the region remain relatively understudied. This study investigates the effect of executive compensation (EC) and board sustainability committee initiatives (BSCIs) on both self-reported greenhouse gas emission reduction initiatives (SRGI) and actual greenhouse gas emission (GHGE).

Design/methodology/approach
Through the lens of resource-based view, legitimacy and stakeholder theoretical perspectives, the study conducts a fixed-effects model over a dataset of 2,310 firm year observations from African countries between 2002 and 2022.

Findings
The findings show that while EC has a negative impact on SRGI, it does not have a similar effect on outcome-based GHGE reduction. The study observes that SRGI has no effect on actual GHG emissions. We add a fresh dimension to the literature by documenting that BSCIs are associated with greater outcome-based GHGE, but do not seem to improve symbolic SRGI. The evidence shows that BSCIs have no moderating impact on the association between symbolic SRGI and outcome-based GHGE. Finally, the study establishes that the predicted associations vary across different periods.

Originality/value
This study helps unpack the role of the board sustainability committee, which Orazalin et al. (2024) show has key economic implications. The findings help stakeholders including corporate boards, executives, and regulators to understand how board sustainability committee characteristics and EC are associated with GHG emissions. The results are particularly essential as this study demonstrates the need for specific standards for disclosing GHG emission-related information, notably in the non-existence of mandatory GHG reporting.

Citation

Saa, V. Y., Morrison, E. A., Adu, D. A., & Joseph, D. (in press). Unravelling the relationship among corporate sustainability initiatives, executive compensation and corporate carbon performance: new insights from African countries. Journal of Accounting Literature, https://doi.org/10.1108/jal-03-2024-0052

• Journal Article Type: Article
• Acceptance Date: Dec 10, 2024
• Online Publication Date: Jan 22, 2025
• Deposit Date: Dec 20, 2024
• Publicly Available Date: Jan 22, 2025
• Journal: Journal of Accounting Literature
• Print ISSN: 0737-4607
• Publisher: Emerald
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1108/jal-03-2024-0052
• Keywords: Board sustainability committee initiatives; Greenhouse gas performance; Self-reported greenhouse emission initiatives; Executive compensation 2
• Public URL: https://nottingham-repository.worktribe.com/output/43098155
• Publisher URL: https://www.emerald.com/insight/content/doi/10.1108/jal-03-2024-0052/full/html