Do Sustainability Committees Matter for Corporate Water Management Performance? Evidence From European Listed Firms

Corporate water management has become a central component of environmental governance, particularly since the adoption of the Sustainable Development Goals. Yet the empirical evidence on whether sustainability committees enhance firms' water performance remains limited and mixed. Drawing on legitimacy and stakeholder theories, this study addresses this gap by examining the impact of sustainability committees on water‐related performance among publicly listed European firms. Using a panel dataset of 326 STOXX Europe 600 firms from 2011 to 2022, we construct an index of water performance based on three items: water policy efficiency, water efficiency targets, and water technologies. We estimate the main model using Feasible Generalized Least Squares (FGLS). Additional analyses assess heterogeneity between water‐intensive and non‐water‐intensive industries, and examine whether the committee‐water performance relationship changed after SDG adoption. The findings show that the presence of a sustainability committee is positively and significantly associated with water management performance. This relationship is stronger in water‐intensive industries. However, we find no evidence that it became more pronounced after the adoption of the SDGs. To assess the robustness of our results, we implement a control function approach within a Correlated Random Effects framework accounting for initial conditions, conducting sub‐sample analysis, and estimating a random‐effects model. Our main results remain consistent across all specifications. This study provides a new empirical assessment of the role of sustainability committees in corporate water management. The results highlight the growing importance of sustainability governance mechanisms in enhancing corporate water management practices and provide valuable insights for regulators, corporate managers, and investors.