**1. Introduction**

The board of directors is a company's main agency of corporate governance and is responsible for protecting the appropriate interests of stakeholders by directing the firm's operations and supporting its decision-making [1]. Independent board directors are individuals whose only business relationship with the firm is their directorship. Anderson and Reeb use the proportion of a board that is composed of independent members as a measure of the board's independence [2]. We adopt a theoretical framework to formulate hypotheses according to which increasing board independence and greater expenditure on ERP digital technologies, evaluated first separately and then together, will result in firms having a better environmental performance.

It was suggested by Jensen and Meckling that, should they have the opportunity, and should egotism and guile be their main drives, then managers might adopt opportunistic behaviour and follow a course of action that does not work in the best interests of external investors [3]. As indicated by Shleifer and Vishny, shareholders might adopt various forms of corporate governance, for example, contractual relations, incentives, and strategies of board monitoring, as a means to combat such opportunism [4]. The agency view of corporate governance assumes that shareholder interests are considered paramount,

**Citation:** Napoli, F. Corporate Digital Responsibility: A Board of Directors May Encourage the Environmentally Responsible Use of Digital Technology and Data: Empirical Evidence from Italian Publicly Listed Companies. *Sustainability* **2023**, *15*, 2539. https://doi.org/10.3390/ su15032539

Academic Editors: Akrum Helfaya and Ahmed Aboud

Received: 2 December 2022 Revised: 22 January 2023 Accepted: 23 January 2023 Published: 31 January 2023

**Copyright:** © 2023 by the author. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

and emphasis is placed on economic (financial) efficiency [5]. In terms of its impact on Corporate Social Responsibility (CSR), that is, companies' non-financial results, agency theorists indicate that corporate governance strategies ought to be designed in such a way that CSR practices will only be adopted if they guarantee an increase in efficiency [6].

Here, we look at the board of directors as a governance mechanism that has an impact on the firm's environmental performance. In our empirical analyses, we will use the data on how much greenhouse gas the firm emits as a negative proxy of its green performance. In particular, the environmental performances will be measured as the natural logarithm of the quantity (Kg) of the emissions of CO2eq (CO2 equivalent) multiplied by −1. Therefore, a good environmental performance will be indicated by higher values of the variable.

According to agency theory, boards attempt to control managers so as to avoid agency conflict. We focus on the degree to which a board of directors may be independent and the impact this has on the firm's environmental performance. From this perspective, it has been said that one consequence of an independent board is that it will reduce conflict of interest within the firm and make sure that management acts in the best interests of the stakeholders [7]. This is also true for stakeholders' environmental demands [8,9]. Those who diminish the role played by independent directors suggest, rather, that independent directors are often appointed on the basis of their financial awareness, and, indeed, some suggest that independent directors do not represent stakeholders as well as they do shareholders [10].

ERP Systems are packaged software solutions that have the function of integrating the complete range of a firm's processes and operations in order to present a holistic view of the business within a single information and IT architecture. This is desired because it paves the way for organisations to have business processes and operations that are environmentally friendly [11,12]. Moreover, an organisation that aims to improve its environmental performance has to be able to evaluate the components on which it depends, so it needs to implement environmental accounting instruments. ERP systems provide functionalities that can be used relatively easily to implement IT-based Environmental Accounting Instruments. Therefore, it may be interesting to study this application of ERP technologies in order to understand the implications that modern digital technologies might have for the relationships between a firm and its stakeholders, with particular attention to their environmental protection expectations. In Section 2, predictions are made regarding governance practices and the use of ERP-type digital technologies that might help improve corporate environmental performance. The empirical research is presented, and the variables, methodology, and data are described in Section 3. A sample of 265 yearly observations of firms is the focus of our research. The results we obtained indicate that the more independent a board is, the better the firm will perform environmentally and that using ERP technologies more intensively does not always correlate with better environmental performance. In particular, we find that greater use of ERP systems only increases the positive effects that the above-mentioned board independence produces on environmental performance. In Section 4, we discuss in detail the results of the empirical analysis and the conclusions that can be drawn.

Corporate governance may have a positive effect on promoting environmentally friendly practices [13]. To date, there are still only a few works that investigate the relationships between the characteristics of the structure of boards of directors and firms' environmental performance [8,9,14–16]. This paper aims to extend this area of study by looking at how the relationship between environmental performance and the adoption of digital technologies evolves as the independence of the board of directors changes. Our empirical analysis found that a firm's green performance and control of pollution are influenced by the characteristics of its corporate governance and that greater use of digital technology such as ERP leads to more "green friendly" results when the board's independence is also reinforced.

Boards influence the moral codes and ethical considerations and guide the behaviour of the collectivity and individuals within the organisation. We conclude that the presence of independent directors on a board has an impact on the organisation's judgement and choices in digital matters. Firms with independent boards use digital technology to attain certain goals that are perceived as socially, economically, and environmentally more responsible. This finding is useful both to practitioners who are looking for the governance mechanisms to implement in a firm that will best meet stakeholders' environmental expectations and to researchers who wish to study the antecedents of CDR.

#### **2. Framework and Hypothesis**

Digital technologies increase a firm's productivity and open new horizons while also posing ethical and social problems. The fact that new technologies pose a social risk makes them a subject of study with regard to their social responsibility [17]. Problems arise in situations that clearly involve all of us, given that we are all citizens and consumers. Some examples of this are smart devices that constantly record data or self-driving vehicles that might put people in danger. Many similar ethical problems may emerge in firm contexts, although here, they will sometimes be less obvious. The company ethic is defined as the rules and standards which guide the firm's business judgements and choices [18]. Recent theories based on the general idea of ethics define CDR as the set of specific values and rules which guide the organisation's judgements and choices in digital matters [19–21]. These CDR-related values and choices share some principles and objectives with CSR, that is, the efforts the organisation makes and the responsibility it takes for social and ecological causes in general. Despite this eventual similarity, Lobschat et al. claim that CDR should be considered explicitly and separately from CSR because of the peculiarities of digital technologies [19]. Three characteristics are highlighted, which justify this explicit consideration of digital responsibility as being distinct from the organisation's wider social responsibility. In the first place, technological developments have exponential growth, and innovations multiply and combine in such a way as to offer innumerable alternative uses. For Brynjolfsson and McAfee, it is particularly this growth through the recombining among innovations that require corporations to face up to what digital transformation really means [22]. Examples of such growth include *big data and analytics*, which have been around for years, but today work together with new systems of Artificial Intelligence (AI), Cloud Technologies, and High-Performance Computing. Combining these digital technologies allows greater volumes of already-collected data to be used in ways that could not have been foreseen only a few years ago but that have a great impact on the environment. This is exactly what is happening in the agricultural sector, for example, especially in the context of precision agriculture and livestock farming applications [23]. Secondly, ethical and social preoccupations have to respect the malleability of digital technologies [24,25]. Social media was not created intentionally to spread fake news, but its algorithms, projected to maximise people's involvement, have contributed to this growing tendency [26]. From a firm's perspective, digital responsibility entails a wide, complex, and highly dynamic set of moral challenges that are not all foreseeable at the time a technology is planned or data is acquired but only emerge as they are used over time. Authors who have looked at these problems have shown how, for example, a firm might acquire digital technologies with the best of intentions, but, as a consequence of the extremely "malleable" nature of this technology, there is a high risk of its being exploited in unanticipated ways [24,27]. Thirdly, the arguments that say that specific company rules have to deal with digital responsibility also derive from the pervasive nature of digital technologies. It has become almost impossible to perform daily activities without using digital technology (e.g., apps). These three aspects—the exponential growth of technological development, the malleability of technology and data, and the pervasive nature of technology—lead to specific challenges beyond the generally understood idea of CSR. The assessments and choices that firms make in order to deal with these challenges are conditioned by the system of values and rules that underlie their CDR.

The absence of regulations in industry 4.0 and the unpredictability of the advance of technologies are not a limitation to creating a scenario of corporate digital responsibility. The development of social responsibility in digital contexts is possible and necessary [17]. For Wagener, CDR is revealed in the voluntary effort to manage digital resources responsibly with reference to the following arguments of interest [28]:


We focus on ERP systems, which make further digital options possible and available to firms, as well as being a good *proxy* for the intensity of the use of digital technologies in general [29]. Over the last three decades, the use of packaged application software for ERP has emerged. Indeed, today it is widely used in large firms and, thanks to the modularity of software solutions, has been adopted by many small and medium enterprises. The ERP industry includes the world's fourth largest software vendor (SAP, a German firm that is the largest producer of ERP software in the world) and several others from the largest software firms (such as Microsoft, IBM, and Oracle which are, respectively, the second, third, and fourth largest vendors of ERP systems). Since ERP systems aim to computerise and integrate core business processes, the implementation by the firm of ERP technological systems precedes or accompanies investments in other digital technologies such as automation, data analytics, artificial intelligence (AI), and machine learning. It is precisely because they are so widely found and able to integrate and combine with other more recent digital technologies that ERP technologies are such a good proxy for the digitalisation of a firm.
