The Impact of Sustainability Committee on Environmental, Social and Governance Reporting Quality: Evidence from ASEAN-5

Abstract

The board-level sustainability committee (SC) serves as a pivotal mechanism for enhancing the quality and transparency of environmental, social and governance reporting (ESGR). However, the existing literature offers limited insight into how specific attributes of SC play a role in influencing ESGR quality. This study aims to bridge this gap by empirically examining the relationship between specific SC attributes and ESGR quality among the publicly listed companies in the Association of Southeast Asian Nations (ASEAN)-5. The study’s findings were based on 896 firm-year observations from the non-financial listed firms in ASEAN-5, covering from year 2020 to 2022. Employing a panel-corrected standard errors regression analysis, the results suggest that SC independence acts as a key driver in enhancing the ESGR quality. Conversely, SC gender diversity is found to have a negative effect on ESGR quality. Moreover, we find no statistical evidence that SC size, educational level and expertise have a significant effect on ESGR quality. These findings offer fresh insights into how SC attributes influence ESGR quality, particularly in the ASEAN context. It also provides practical guidance for regulators by emphasizing the need to embed committee independence when formalizing such committees within board governance frameworks.