**2.1 Structural diversity in boards and CSR**

Structural diversity refers to diversity of boards. In fact, boards display different features in terms of structure, size, the separation between management and control functions as well as the percentage of independent members [3, 6].

First, the board size is a key determinant of the board effectiveness. Regarding social performance, studies provide mixed results. On the one hand, large boards may be associated with more resources and knowledge, very valuable to improve the decision-making process [41–43]. Appointing more diverse profiles to boardrooms increases the firm's social capital [35, 44, 45] and leads to a more balanced decisionmaking. They can therefore increase the firm's involvement in socially responsible activities, and social performance [2, 41]. Neo-institutional and stakeholder theories state that large boards are representative of diverse interests [44, 46]. Also, from a dependency theory perspective, large boards have better information and more specific knowledge [9, 43]. From an ecological view, De Villiers et al. [47] argue that large boards are likely to have members with environmental knowledge, who may influence board's decisions on environmental issues. Their findings show a positive impact of board size on environmental performance. Accordingly, more oriented advice on strategic decisions could be provided by large boards [18, 48–50].

On the other hand, the agency theory holds that large boards could suffer communication and coordination problems which slower the decision-making process, specifically when directors have very different backgrounds [51, 52] and diversity is low in top management positions. For instance, CEOs are more powerful and influential over small boards than large ones: it becomes easier to reach a consensus [51].

Second, duality is another form of diversity of boards. According to Surroca and Tribo [53], duality leads to a concentration of management and control functions. When the CEO is also the chairperson, there is a concentration of power that does not benefit CSR investments [53, 54]. For instance, CEO-chair may pursue opportunistic strategies to have more private benefits in the short term, at the expense of long-term and less profitable activities such as CSR ones [54, 55]. In fact, Entrenched CEOs are prone to adopt opportunistic strategies to protect their

interests at the expense of shareholders. Accordingly, they could marginalize value enhancing projects, specifically low profitable and long-term projects such as CSR and innovation projects. Under the pressure of shareholders looking for immediate returns, CEOs are likely to undertake profitable and less sustainable projects. In this sense, De Villiers et al. highlight that "If the CEO is faced with a compelling motive for maximizing short-term financial gains at the expense of strategic investments in environmental opportunities, the presence of a dual CEO-chair will reduce the likelihood of the board approving immediate investments in environmental opportunities with long payback periods" ([42], p. 1642).

Furthermore, the duality structure could also limit the board effectiveness, specifically in terms of control and monitoring [56] and could decrease transparency and the governance quality which does not improve CSR performance [42].

Finally, the presence of independent directors has been widely discussed [57]. Independent directors are prone to reduce agency conflicts and to ensure effective monitoring and therefore better management quality. For Adams and Ferreira [58], their presence solves attendance problems on the board. Independent directors provide better management advice [34, 57]. From an agency perspective, it is widely known that they decrease opportunistic behavior of managers who could be tempted to extract some private benefits, specifically under asymmetric information [58–60]. To better serve the stakeholders' interests, they may ask for more details to be disclosed in annual reports [61]. However studies on the association between board independence and CSR disclosure do not provide conclusive results. Some studies [62–64] provide evidence that independent members are prone to increase disclosure. Prado-Lorenzo and Garcia-Sanchez [65] and Lim et al. [66] identify a negative influence, while other studies find non-significant association [67].

Independent board members are likely to support investment decisions that respond to stakeholders needs [2, 34]. On the same vein, [58] show that their presence improves board functioning, particularly attendance problems on board meetings. The results of previous studies show that independent directors have a significant positive effect on CSR performance [68–71].

However, when we focus on specific dimensions of CSR such as the governance quality, the quality of the work environment, the protection of human rights, the involvement in local activities and ethical activities, they seem to have influential effects only on specific areas. For instance, Béji et al. [2] show that board independence has a positive effect only the governance quality. Their result is in line with a large number of studies highlighting the positive influence of independent directors on the quality of corporate governance [72–75]. One explanation is that independent directors provide strong incentives to align internal expectations and firm objectives through good governance practices [74, 75].

Regarding environmental performance, De Villiers et al. [42] provide evidence that boards with more independent directors are more likely to have more information and knowledge of monitoring environmental performance. Precisely, environmental strengths are positively and significantly related to director independence.

These different results are mainly explained by the different proxies used to assess the social performance and the sample considered by the study. For instance Beji et al. [2] is drawn on a European sample, namely French listed companies and Vigeo Eiris scores while De Villiers et al. [42] relies on MSCI-KLD scores.

#### **2.2 Demographic diversity in board and social performance**

Demographic diversity is a form of diversity inside boardrooms. The profile of board members has changed in the last years, because of a social pressure: the boards are expected to appoint more diverse profiles in the image of the society they produce. Consequently, gender, foreign, and generational diversities have attracted an increasing interest.

Many studies put forward that female directors are likely to increase CSR performance at different levels [2, 5, 6, 9, 76]. In fact, gender diverse boards have better social performance than less diverse ones [9]; In fact, women members seem to be more concerned about governance, environmental and social issues [21, 77–81]. They could be tempted to undertake non-profit activities (The social identity theory, [82]). In line with the social role theory [83, 84], women are prone to be altruistic and to care about relationships [85]. In fact, previous studies point out that women have higher cognitive moral reasoning scores and more ethical perceptions than men [86–88]. From the upper echelons' theory perspective [30], women display specific cognitive features. They bring their differences to boardrooms that have been male-controlled places for long time [89, 90].

Specifically, Elstad and Ladegard [91] point out that female directors could change the decision-making dynamics inside boardrooms. In line with the dependence resource theory, women have different experiences and qualifications from their male counterparts, they could, therefore have different values and analysis perspectives. This leads to more interactive dynamics in boardrooms [92]. They have most often more connections to external sources, which make them, wanted in boards and on specific board's committees, such as audit, governance, ethics and environment committees [58, 93]. They also have different academic and professional backgrounds which give access to more resources and specific networks (the resource dependence theory, [35]). These resources are valuable when it comes to the implementation of CSR projects [77–79, 94].

Also, there is a large consensus that women are less risk averse than their male counterparts [85]. Many studies have put forward differences between men and women in terms of skills, competences, networks and risk-preferences (see among others [95–98]), p. 64. For instance, Torchia et al. [99], Diaz-Garcia et al. [100], and Kang et al. argue that women have better and specific knowledge of customers. They could bring new perspectives and ideas that could lead to the introduction of new products and processes [101]. Furthermore, appointing women to director's positions could improve the communication and the interaction inside R&D teams, without taking excessive risks: [96–98], provide evidence that women are more risk-averse than men. All these features could lead the reader to think that women directors are prone to be more concerned about CSR and to recommend more socially responsible actions.

However, taking into account female and male attributes such as the age, and the academic and professional experiences show non conclusive evidence on whether women on corporate boards increase the propensity to take risky decisions or favor risk-avoidance (see among others [95, 98, 102]).

Also, many studies conclude that women display a lack of industry experience, concentrate on less profitable activities [103, 104]. One explanation could be the small number of women on top management positions and boardrooms because of the glass ceiling barrier (glass ceiling theory, Morrison et al. [105]). The glass ceiling was identified in the 1980s by the *International Labor Organization and Catalyst*4. The glass ceiling theory is about "*those artificial barriers based on an attitudinal or organizational bias that prevents qualified individuals from advancing upward into management level positions*" (ILO, 2001): women cannot easily achieve top management positions because of the lack of mentoring and effective networks. Social and cultural barriers, such as the work-life balance that women have to preserve, could stop them when they want to get access to leadership. Gender quota laws have been

introduced in several countries (Norway, France, Spain, etc.) to increase women presence on board. However, female directors are still prevented from moving up into management and leadership positions and are facing significant barriers. Indeed, women are not appointed to strategic and advising positions in the board such as CSR, development and remuneration committees. Most often, they are members of monitoring committees such as governance, audit and risk committees, particularly in male-dominated companies [106]. In fact, women are still not involved, in an effective way to influence the decision-making process. They face a new glass-barrier in boardrooms: the glass cliff barrier [107–109]. Despite, the fact that women are selected to sit in monitoring committees; they are likely decrease CEO salaries, bonuses and total compensation [110] which increases transparency.

Yet, many papers have discussed the costs and benefits of regulation dedicated to increase women representation in top management levels [111, 112]. Pro and antiregulation arguments make the debate on the efficiency of gender quota law very intense, specifically should be considered specific governance and social features. For instance, highly qualified women who are able to sit on boards suffer from lack of visibility because of weak networking and social circles. As a consequence, firms make-believe that they have a limited pool of female talents. Hence, social ties and contacts are critical to the appointment of women to director's positions. This could increase the risk of recruiting unqualified female directors [113].

Generational diversity is also a requirement for social performance [2, 6, 114]. Age could be a proxy for the directors' wisdom in managing the business, their experience and their openness to new ideas [6, 115]. According to Ouma et al. [115], successful business management relies on more age-balanced organizations, specifically in top management positions. Besides, age diversity could help to solve "narrow group thinking" problems and be associated with a specific level of knowledge and openness to new ideas [114, 115]. When they mature, directors could become more sensitive to society's needs: they get involved in a giving-back to society process [6, 116]. Thus, old directors are likely to improve social performance. Regarding detailed dimensions of CSR, Ferrero et al. [117] argue that age diversity leads to a more balanced decision-making which enhances corporate performance while Béji et al. [2] find that they have significant effects in numerous CSR areas, specifically the quality of the work environment, the protection of environment and human rights as well as the governance quality. However, we should highlight that Béji et al. [2] results provide evidence that old directors are prone to display higher moral reasoning in France, not only because of getting more experience and wisdom but also in response to several specific programs, such as Grenelle II Law in 2011, dedicated to increase the firm's involvement in CSR activities. Furthermore, the Copé-Zimmermann law,1 commonly known as the French gender quota law, introduced in 2009 and implemented in 2011 has increased dramatically the presence of women on boardrooms. It applies to listed firms and firms with on average more than 500 fulltime employees for three successive years or with a yearly turnover (or a total assets) of at least 50 million euros. This law has short and long term effects. In the short term (by the end of 2012), all non-gender diverse boards, namely male controlled ones, have to appoint a director of the opposite gender. In the long term, non-gender balanced boards have to achieve at least 20% directors of the under-represented in 2014 and at least 40% in 2017. If the firm is non-compliant, there are penalties. Specifically, new member appointments that are not binding the law must be considered null. However, the decisions voted by the non-compliant boards, are not canceled. The two laws have boosted the social performance of companies through different channels: because of the limited pool

<sup>1</sup> https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000023487662&categorieLien=id

of female candidates, firms appointed younger women to their boards to comply with the gender quota law, which have influenced the board structure and therefore governance quality. Grenelle II law put pressure on listed firms to raise more money on socially responsible projects.

We should also notice that there have been many changes in universities curricula in the last years. Management and business programs, on particular, have introduced specific sessions and courses on sustainable development and CSR. This means that new graduated candidates are aware of the importance to align social and financial performances and consider financial as well as environmental and social risks. Accordingly, young directors could also be sensitive to CSR activities and concerned about environmental and ethical issues [6]. For instance, [80] provide evidence that young members are sensitive to environmental and ethical issues.

Another interesting feature of board diversity is the presence of foreign members [2, 6, 118]. The appointment of foreign directors responds to the business needs of globalization [119]. The empirical investigation shows that nationality diversity enhances the firm involvement in philanthropic and local social activities [120]. Lau et al. [121] find that the presence of foreign directors on the board has a positive relationship with CSR, they put forward that foreign nationality brings a positive energy for directors to follow socially responsible activities. Their international expertise, broader and diversified networks, awareness of environmental and social issues and willingness to use new technologies are value-enhancing in terms of social performance [2, 118, 120]. Non-local directors bring their cultural values and new connections to the business, specifically on environmental projects [2, 6, 122]. Also, foreign directors allow the company to have access diversified and international expertise and increases exposure to cultural diversity [118]. They are likely to focus on environmental management and to prefer technologies producing less waste and less pollution [123]. In fact, Christmann et al. [124] provide evidence that they have access to environmental management information, particularly international environmental requirements and opportunities. Besides, using a sample of U.S. firms, Harjoto et al. [125] find that having greater board nationality diversity could improve firms' social performance by decreasing individual biases and prejudices. In addition to their positive influence on environmental issues, Béji et al. [2] show that they increase the firm's interaction with local communities [126].

Different educational backgrounds are also a valuable form of diversity in boardrooms [127–129]. Many studies show that post-graduated directors are positively associated with the firm's success [30, 130]. High-educated members have better capacity to absorb new ideas and adopt new challenging tendencies. They also can adjust quickly their strategies and decision-making process to comply with new regulations and sudden events [128, 131, 132]. Rupley et al. [127, 133]; Goll and Rasheed [128]; Hillman and Dalziel [129]; Hambrick and Mason [34] provide evidence that business-graduated directors could influence firm performance and strategies. In terms of CSR, they are likely to be more sensitive to environmental issues [134, 135]. Their international skills and experiences are valuable to understand environmentalists' needs. For instance, Gadenne et al. [136] and Vives [137] show that post graduated directors are able to generate a greater level of commitment to CSR activities. Also, Shahgholian [138] put forward that highly-educated directors are more likely to have knowledge of environmental issues, which may help the board to develop environmental activities. Regarding education's type, Sleeper et al. [139] find a positive relationship between CSR and business education. In the same vein, Panapanaan et al. [140] argue that business-educated members have higher sensitivity towards ethics, CSR, sustainability and, consequently, prefer ethical projects. Unlike previous studies, Béji et al. [2] find no significant association between management-graduated directors

and the CSR global performance. Surprisingly, they are prone to be less sensitive to environmental and ethical issues and more concerned about the governance quality. In fact, these divergent results could be explained by the fact that most of board members in Béji et al. [2] sample are middle-aged (55 years old on average) and had attended business and management programs in their earlier life focused on financial performance: the concept of social performance has been recently introduced in the universities' curricula. They have, therefore, the required qualifications to increase profitability and handle risks, in other words on how to serve the shareholders' interests. Furthermore, they are prone to prefer short-term projects with immediate returns at the expense of risky, less profitable and longterm projects, such as CSR ones [141].

Finally, sitting on multiple boards is a proxy for the busyness of the board members. Board busyness could influence the firm involvement in CSR activities [2, 127, 142]. Some studies have focused on the link between multiple directorships, CSR disclosure, and firm environmental performance. Multiple directorships could have a positive effect on voluntary environmental disclosure [127], and help the company to adopt policies of other companies. They could also bring to the board information about unfamiliar practices to the firm [129].

In terms of firms' environmental performance, a large number of studies argue that directors who are sitting on multiple boards can gain access to more information about environmental initiatives and find out more about other firms' environmental activities [86, 142]. On the same vein, many studies put forward a positive association between multiple directorships and the involvement in proactive environmental strategies [42, 100, 142]. Focusing on specific CSR dimensions shows that directors' busyness significantly improves the quality of work environment, the awareness of environmental issues and the involvement in ethical activities [2].

It is straightforward to see that readjusting the board composition could be valuable to induce changes that enhance social performance. In fact, firms looking for sustainable development cannot ignore stakeholders' expectations and have to act responsibly [143, 144]. Getting involved in socially responsible activities could be challenging and provide new opportunities to create value, differently. Accordingly, many firms have decided to establish specialized committees (CSR committees CSRC) to go beyond elementary and responsive CSR practices and to achieve more sustainable and strategic ones [145, 146].

In the following, we discuss the features of CSRC and how they could lead to bestintegrated CSR models and to meet, therefore, the plurality of existing demands.
