1. Introduction
In September 2015, the UN General Assembly gathered as part of the 70th session and adopted Sustainable Development Goals (SDGs) which aim to develop a universal sustainability program “of people, by people and for people” which is the vision with the United Nations Educational, Scientific, and Cultural organization’s (UNESCO) active presence. The essence of these goals is a global agreement which aims to respond to poverty, protect the planet by different sustainable means, and ensure inhabitants’ peace.
The SDGs set is an integration of three pillars of sustainable development which include economic, environmental, and social development [
1]. These UN SDGs are the agenda of 2030 for sustainable development and are adopted by 193 nations since they tend to address more than what was covered by the UN Millennium Development Goals (MDGs). SDGs encourage the shift of focus from developing the nations in a wealth perspective towards the sustainable development of all nations. This shift focuses on the sustainability of the world’s economy and social development globally while protecting the global environment [
2].
The three stated pillars are projected in 17 goals, where four relate to economic development, eight relate to social development, and four to environmental development. Social goals include SDG 1: No Poverty, SDG 2: Zero Hunger, SDG 3: Good Health and Well-Being, SDG 4: Quality Education, SDG 5: Gender Equality, SDG 7: Affordable and Clean Energy, SDG 11: Sustainable Cities and Communities, and SDG 16: Peace, Justice, and Strong Institutions [
3]. Whereas, the global environmental protection is covered under SDG 6: Clean Water and Sanitation, SDG 13: Climate Action, SDG 14: Life below Water, and SDG 15: Live on Land [
2,
4]. Overall, these goals highlight the importance of being responsible socially and environmentally.
Countries over the world are facing the interconnection of economic and environmental sustainability and have no choice in choosing between economic growth and dealing with climatic changes [
5]. There is increasing scientific evidence that climatic changes tend to resist the achievement of economic development goals over the world. Moreover, climate change has economic costs as well as environmental costs of the carbon footprint at almost all the levels in a country from national to the individual, which provide grounds for UN Framework on Climate Change (UNFCCC) negotiations for internationally agreeing on certain aspects of environmental development. The UNFCCC of the Paris landmark Agreement 2016 integrates the actions, investment, and other initiatives to combat climate change and its key considerations include a long-term temperature goal for limiting the global temperature increase to well below 2 °C.
The impact of a particular sector on the environment and society makes it important for sustainable development and the energy sector is the most important of all. The energy sector particularly plays a vital role in sustainable environmental development since the “green economy development” is in a growing trend [
6,
7,
8]. This trend aims to restructure the economies due to climatic changes and rising sea levels as the key concern of the globe is to mitigate or adapt to the climatic changes. In pursuit of doing so, the efforts directly involve the contribution of the energy sector such as the reduction of greenhouse gases, exhaustion of fuel sources, and renewability of energy sources [
9]. In this way, the energy sector can create a difference, not only for humans but for living creatures as well, such as the wildlife.
Another imperative ground of centering the energy sector for the aimed research is that this sector can be a key origin of the carbon footprint for society. The employed Human Resource (HR) can be taken as the foremost social aspect which can be directly impressed by the sector-wide policies on health and safety. For instance, the oil extraction companies need to uphold appropriate measures for emergency exits which are deemed to be necessary. Further, the employed HR has relatively stringent working requirements than any other sector, which makes the energy sector a probable source of social imbalance and can impact sustainable social development [
10]. Moreover, the risk of corruption and other social responsibility concerns represent an important issue in the energy sector [
11].
Evidence of companies not contributing to attaining sustainable development led to corporate scandals and Volkswagen is a recent example in this regard. The carbon footprint that was hidden by the company led to a loss of 1/3 market capitalization since the scandal came to the limelight and attracted a penalty in billions. The produced vehicles needed a repair that incurred additional costs to the company along with the reputation disruption its executives faced [
12,
13]. It is important to note that the strategic approach of such corporate scandals evidence that the governance structure can direct the CSR performance.
An imperative aspect of corporate governance concerning CSR is the presence of a CSR committee, which gives an insight into a company’s strategic approach towards its social responsibility. The CSR committee is deemed to decide the CSR performance of a company, while the independence level of the board and duality in the role of CEO are also considered to affect the CSR direction and eventual CSR performance [
14].
The prior grounds show a gap between the approach to the CSR committee and actual CSR performance towards the two key pillars (environmental and social) of sustainable development [
15,
16,
17]. We aimed to test the effect of the CSR committee in particular, on the environmental and social development. Prior literature also promoted the use of other governing aspects as CEO duality, independence onboard, and females on board to applaud the CSR performance of the companies’ sample [
18,
19]. These committee attributes help us capture the essence of environmental and social performances whether it takes significant impressions of different CSR committee elements.
To test the stated aspect, we have taken energy sector data from 45 countries over the globe for the period covering 2002 to 2017. Our empirical results show that the presence of a CSR committee has a positive impact on the environmental and social performances of a company and an increase in the size of a CSR committee tends to affect environmental and social performance positively. The experience of the CSR committee in a company results in the betterment of performance for the achievement of environmental and social goals, whereas the level of independence in the CSR committee does not seem to affect the environmental performance and creates a slightly positive impact on the company’s social performance. Additionally, more powerful CEOs reduce the effectiveness of CSR committee characteristics. Collectively, our findings stress that the existence of the CSR committee and its associated attributes are a primary contributor to produce goods and services sustainably (improve environmental and social responsibility).
Further, we organized this manuscript as follows.
Section 2 sheds light on the literature and development of the hypotheses.
Section 3 discusses the data, measurements, and the methodological approach.
Section 4 presents the results on the CSR committee on environmental and social responsibility, as well as additional analysis. Lastly,
Section 5 concludes this study and presents the future directions.
5. Conclusions
In this paper, we investigate how the CSR committee impacts environmental and social performance. Our study contributes to the sustainable development literature in two ways. First, we provide evidence of why the presence of the CSR committee is specifically important for the various sustainability-related outcomes. Prior studies have established a significant impact on the firm’s non-financial performance in terms of environmental and social dimensions [
25]. Our study extends this line of inquiry by suggesting that firms with CSR committees are more effective in improving social conditions and supporting environmental performance initiatives (such as carbon footprints). Second, our findings stress that more experienced and large CSR committees are more effective in improving the firm’s social welfare and mitigating carbon footprints. Additionally, we also check this association with the presence and absence of the CEO duality characteristic of the board. Combined, this paper shows that environmental and social claims of stakeholders improve with the presence of CSR committees in energy firms.
As a result, we can extract practical implications on the importance of CSR committees that can enhance the non-financial performance of the company. Increasing the participation and presence of the CSR committee helps meet the needs of all the stakeholders and improves the transparency actions [
32]. According to the obtained results, it can be inferred that CSR committees are the efficient participatory bodies in firms to ensure the principles for environmental and social concerns. Our findings can serve as a guide for all energy sector firms (metal mining, coal mining, oil and gas extraction, nonmetallic minerals, except fuels, petroleum, coal products or electric, gas, and sanitary services) that want to implement sustainable policies, knowing that the CSR committee controls, monitors, and promotes sustainable behavior for the firms [
59]. Lastly, our findings help the practitioner favorably achieve the SDG 7, SDG 8, and SDG 13 with the help of an effective CSR committee.
Limitations and Research Directions
This study has certain limitations. First, the current research tried to consider the energy sector to test the hypothesis. According to the energy researchers, this sector pollutes the environment and affects society on a large scale. However, findings with environmentally-friendly firms may differ from our main results. Second, our final sample comprises energy sector firms from 45 countries over 2002–2017, while this association may change in a crisis (such as COVID-19). Third, most of the concerned data come from advanced and emerging economies. Therefore, we cannot generalize our results to other under-developed countries. Finally, our findings show that the CEO duality changes the association among the CSR committee characteristics and the firms’ environmental and social performance [
59]. How other board characteristics may affect this relationship is still a gap. Thus, these are the limitations of the study that restrict the research and hence our sample results.
Our findings provide some future research directions. First, our findings are generalized for the energy sector. However, other implications for various sectors should be included in future research designs in line with CSR characteristics to test the environmental and social performance. Second, the recent stream of research and widespread application of the open innovation concept would be extremely relevant for measuring the CSR committee link for the firm’s effects, before and after 2016 (The Paris Agreement). Third, green innovation is a way to improve environmental performance that deals with green plantation and refers to the innovation in technology applied to minimize wastage, global warming, and use of water, coal, oil, electricity, and conserving energy [
60,
61]. It also enhances social performance development in terms of people and society at large, which is driven by the community, diversity, and employee relations. Thus, this relation is more prevalent in firms with strong governance mechanisms and therefore important for future decisions [
20].