How Board and Top Management Composition Affects Sustainability Performance

Abstract: This study investigates sustainability performance of Swedish firms through the lens of the upper echelons theory. We test how the size, average age, and proportion of gender in boards of directors (BoDs) and top management teams (TMTs), is related to sustainability performance. While BoDs have been studied in this way several times previously, no other studies, which we are aware of, study the relationship between TMTs and sustainability performance. The study follows a purely quantitative approach and is based on large and mid cap firms on the Nasdaq Stockholm exchange. The sustainability performance of firms is proxied by the ESG-score issued by Refinitiv. The study finds that the size of both BoDs and TMTs is positively and significantly related to sustainability performance. The relationship for the size of BoDs is particularly strong and significant, whereas the one for TMTs is less so. Regarding the proportion of gender, this variable was also positively and significantly related to sustainability performance, but only for BoDs. Finally, the age variable was insignificant for both BoDs and TMTs.