Driving Sustainable Success: The Power Of Executive Pay To Navigate Esg Challenges And Unlock The Potential Of Gender Perspectives

Document Type

Article

Source of Publication

Corporate Governance-The International Journal Of Business In Society

Publication Date

3-5-2026

Abstract

PurposeThis study aims to examine the relationship between boardroom gender diversity (BGD), executive compensation mechanisms tied to environmental, social and governance (ESG) factors and their combined impact on the occurrence of ESG-related controversies.Design/methodology/approachBy using structured equation modeling to analyze data collected from 13 countries, this study examines the indirect effects of BGD on ESG-related controversies mediated by executive compensation linked to ESG performance metrics. The study quantifies the extent of this mediation and examines the potential for strengthening these effects through board members' affiliations.FindingsThe study documents a significant negative indirect effect of board gender diversity on ESG controversies through ESG-linked executive compensation, with roughly 23% of the total impact operating via this channel. This mediating effect is stronger when board members hold more external affiliations, consistent with a moderated mediation mechanism in which more networked boards translate diversity into ESG-aligned pay and lower controversy risk.Originality/valueThis study provides novel insights into the governance mechanisms that reinforce sustainable corporate practices, demonstrating how board composition and executive compensation strategies can work synergistically to reduce ESG-related controversies. By highlighting the importance of gender diversity and the strategic linkage of executive rewards to ESG metrics, this research provides valuable guidance for organizations and policymakers seeking to enhance corporate responsibility and ethical governance. The emphasis on the mediating role of ESG-linked compensation and the enhancing effect of board members' diverse affiliations provides a unique perspective on the practical and policy implications of fostering gender diversity within corporate boards to mitigate ESG risks.

ISSN

1472-0701

Publisher

Emerald

Disciplines

Business

Keywords

ESG controversies, Boardroom gender diversity, Board members, Affiliations, ESG compensation

Indexed in Scopus

no

Open Access

no

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