Does board knowledge matter for ESG performance in the European banking industry?

Abstract

Abstract This study investigates the influence of the knowledge endowment of directors on the environmental, social, and governance (ESG) performance in the banking industry. Applying the generalized method of moments (GMM) two‐step analysis, we analyzed a sample of 115 banks listed in Europe between 2014 and 2022. Building on the Resource Based View and Resource Dependence Theory, we find empirical evidence that board knowledge in terms of cultural, industrial, and financial background affects ESG performance in the banking industry, providing several contributions to the extant knowledge management and corporate governance literature. The research is intended to stimulate the development of practical knowledge management strategies inside companies to improve directors' decision‐making toward corporate social responsibility‐oriented initiatives.

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