The strategic role of sustainability committees: an analysis of mechanisms and committee characteristics in shaping CSR performance

Purpose This study examines the association between the presence of a sustainability committee and corporate social responsibility (CSR) performance. It further investigates whether sustainability-linked CEO compensation contracts, firm-level stakeholder engagement, and sustainability reporting quality mediate this relationship. In addition, the study explores how sustainability committee characteristics influence CSR performance. Design/methodology/approach Using a novel dataset of 27,966 US firm-year observations, this study employs ordinary least squares regression and mediation analysis to estimate the research models. The study also applies robustness checks to address potential endogeneity concerns. Findings The results indicate that firms with a sustainability committee exhibit superior CSR performance. Moreover, our findings are consistent with sustainability-linked CEO compensation, firm-level stakeholder engagement, and sustainability reporting quality serving as important pathways through which sustainability committees are associated with CSR performance. We also find that sustainability committee effectiveness varies with committee composition and characteristics. Specifically, larger committees, greater female representation, longer member tenure, stronger educational qualifications, and overlap with the audit committee are associated with higher CSR performance, whereas higher average member age is associated with lower CSR performance. These findings highlight the importance of a sustainability committee, associated CSR-focused governance mechanisms, and the composition of the committee in shaping firms’ CSR performance. Research limitations/implications The findings provide insights for regulators, investors, and corporate governance practitioners, emphasizing the need to consider CSR-focused governance channels and sustainability committee structures when evaluating corporate social responsibility efforts. Originality/value This study contributes to the growing literature on corporate sustainability governance by providing empirical evidence on how a sustainability committee and its characteristics influence CSR performance, offering practical implications for firms seeking to enhance sustainability oversight.