Green Boardroom Influence on Climate Change Target Disclosure: The Role of Eco-Conscious Investors and Corporate Environmental Attention

Abstract

Corporations are under mounting pressure from diverse stakeholders to address their climate change commitments amidst rising environmental concerns. In response, companies are improving their governance structures to strengthen their climate commitments. This study explores the impact of green directors on the disclosure of climate change targets (CTD), prompted by the recent developments in corporate structures. The dataset for this study includes companies listed on China’s A-share market from 2010 to 2022. The findings indicate that the inclusion of directors with environmental backgrounds on boards enhances the level of CTD. Results also reveal that the entry of eco-conscious investors amplifies the impact of green directors on CTD. The mediation results identify corporate environmental attention as a key mechanism through which green directors drive CTD. The findings remain robust when considering different proxies, variations over time, and checks for endogeneity. Additionally, heterogeneity analysis suggests that the influence of green directors on CTD is pronounced for sensitive sector firms and those exhibiting low sustainability performance. This study contributes to the existing body of knowledge on corporate environmental governance and provides valuable insights for policymakers and corporate leaders seeking to enhance environmental transparency and accountability.

1. Introduction

A range of pressing global challenges, including climate change, environmental degradation, and escalating public health concerns, increasingly confront the world (CDSB, 2019). Therefore, environmental sustainability has become a considerable concern for developed and developing economies (Khalid et al., 2022). Following the Paris Agreement and the establishment of the Sustainable Development Goals (particularly SDG 13) in the 2030 Sustainable Development Agenda, society has become increasingly aware of the environmental costs related to personal behavior that can affect the environment. Considering the significant contribution of firms to climate change, they must be more environmentally responsible and adopt strategies that protect the environment (Z. Liu et al., 2024). Stakeholders demand that companies disclose climate change-related information that depicts their actions’ impact on the environment (Zhu et al., 2023). The dissemination of environmental information, particularly about climate change, can provide substantial benefits for companies and diverse stakeholders (Grosbois & Fennell, 2022).

Scholars have examined the external and internal incentives for climate change disclosure (CCD). Companies publish environmental information due to regulatory pressure, industrial peers, image reputation, and NGOs (X. Chen et al., 2011; He et al., 2022). The company’s long-term strategy to maximize its performance includes disclosures (Wicaksono & Setiawan, 2022). Accordingly, company structure and governance influence environmental disclosure (Kılıç & Kuzey, 2019; Ahsan et al., 2024; Honey et al., 2025). CEOs and senior management are important determinants of environmental disclosure, making them one of the most debated governance mechanisms in the literature (Deng et al., 2024; Lin & Cui, 2024; Zhang et al., 2024). Recently, academics have taken a great interest in the influence of the board of directors on CCD (Asad et al., 2023; Z. Liu et al., 2024). Corporate governance and decision-making are overseen by the board of directors, which advises senior management, monitors policy implementation, and protects the firm’s long-term interests (Thys et al., 2025). As essential board members, their professional, academic, and personal experiences influence the company’s operational and strategic decisions (Lu et al., 2022). Thus, the company’s environmental behavior must be traced to the structure and characteristics of the corporate board.

Researchers are examining the influence of board members’ environmental expertise on environmental behavior, especially regarding transparency (Asad et al., 2023; Z. Liu et al., 2024). Consequently, the concept of a green corporate board (henceforth denoted as a GCB) has recently attracted interest from academic researchers (Cosma et al., 2021; Asad et al., 2023; Jung et al., 2021). A GCB denotes the inclusion of individuals on the board possessing environmental expertise, acquired via education or professional experience (Z. Liu et al., 2024). Previous research indicates that green directors enhance corporate environmental ethics (Cosma et al., 2021), safeguard the environment (Z. Liu et al., 2024), promote eco-friendly investments (Jung et al., 2021), and elevate environmental responsibility. Furthermore, the inclusion of environmentally aware board members might influence the company’s environmental commitments due to their enhanced understanding of the regulatory and reputational environment (Asad et al., 2023). Their participation on the board could improve the efficacy of environmental decision-making. The current literature addresses environmental behavior generically, overlooking the distinct environmental objectives of corporations. We present empirical data on how a GCB may influence corporate disclosure, namely Climate Target Disclosure (CTD), within a developing market scenario.

Despite the great interest in the relationship between corporate boards and climate change behavior, the extant literature on environmental behavior tends to offer a broad overview, often neglecting the specific initiatives that companies implement to tackle environmental challenges. This study aims to enhance the existing body of research by closely examining the commitments that organizations make to address climate change. Specifically, we investigate the role of a GCB in facilitating CTD, thereby filling a significant gap in our understanding of corporate environmental practices. Furthermore, we expand upon previous work by analyzing how eco-conscious investors (EIs) serve as a moderating force that enhances the effectiveness of green boards in driving CTD. Additionally, we propose that corporate environmental attention (CEA) acts as a crucial mechanism through which green boards influence CTD. This approach not only enriches our understanding of corporate environmental stewardship but also highlights the complex dynamics at play within corporate governance and sustainability efforts.

We argue that establishing climate targets and effectively communicating this information to stakeholders has emerged as a key strategic approach for organizations, enhancing their reputational standing and financial performance (Hadziosmanovic et al., 2022). Given that climate targets reflect companies’ commitment to constrain their impact on the global climate (Shen et al., 2020), setting such targets is considered a critical step toward developing an effective climate change strategy (Hadziosmanovic et al., 2022). Moreover, climate targets are a part of the companies’ strategic positioning to improve their image and enhance their legitimacy. Disclosing these targets helps companies respond to stakeholders’ pressures by signaling their commitment to alleviating climate change effects (Faria & Labutong, 2020). Understanding the factors driving CTD is therefore essential to assessing how organizations navigate the complex intersection of environmental responsibility, stakeholder expectations, and corporate strategy.

In light of this study framework, we assert that China offers an ideal setting for examining our research issue. The swift economic expansion of China during the last forty years has resulted in considerable environmental issues (C. Chen et al., 2024). The 2018 Environmental Performance Index Report places China at 120th among 180 nations, with a notably poor air quality rating placing it at 177th. Consequently, enhancing environmental preservation has become a primary priority in China. To tackle this issue, the Chinese government has sought to improve environmental protection by founding the Ministry of Ecology and Environment in 2008 and enacting various policies designed to encourage environmentally responsible practices among enterprises (Khalid et al., 2024b). The State Securities Regulatory Commission mandates that Chinese enterprises report information regarding environmental management (Yang et al., 2020). This study utilizes a sample of Chinese A-share listed companies from 2010 to 2022 and demonstrates both conceptually and empirically that the inclusion of green directors on boards enhances business commitment to publish climate-related objectives. Moreover, studies indicate that EIs enhance the influence of green boards on CTD, with CEA acting as a mediating variable in this association.

This study enhances the existing literature in multiple aspects. This is one of the first investigations to examine the determinants of CTD independently, a domain that has been predominantly neglected in favor of carbon or GHG emission disclosure (He et al., 2022; Johnson et al., 2023). We assert that CTD is a vital sign of business dedication to combating climate change. Setting climate targets is regarded as a crucial element in developing a corporate climate strategy (Shen et al., 2020; Khalid et al., 2025b). Consequently, CTD is a fundamental component of business strategic positioning, intended to augment organizational reputation and legitimacy. By transparently communicating climate targets, companies can address stakeholder needs, thereby demonstrating their commitment to mitigating the effects of climate change (Dahlmann et al., 2019). This proactive strategy meets stakeholder expectations and strengthens the firm’s position as a responsible environmental steward (Hadziosmanovic et al., 2022). Secondly, it enhances the literature regarding the impact of directors’ prior environmental experience on environmental decision-making, encouraging companies to provide more extensive disclosures relating to climate change. Although prior research has focused on board composition elements such as independence, gender diversity, size, and expertise (Borghei, 2021), there is a deficiency in studies exploring how the backgrounds of board members influence the disclosure of environmental management information, especially concerning climate change objectives. This study analyses the border conditions and mechanisms that clarify the relationship between green boards and CTD, demonstrating that this relationship is intensified when EIs are involved in the decision-making process. Consequently, green boards are likely to draw more green investment, leading to enhanced financial and environmental performance for companies (Khalid et al., 2025b). This study elucidates how the green backgrounds of directors, through the introduction of CEA as a mediating variable, translate into increased company environmental consciousness, ultimately affecting CTD. This insight emphasizes the potential to utilize the environmental experiences of board directors to enhance corporate commitments to climate change activities.

The remainder of the paper is organized as follows: The next section develops a conceptual framework, reviews the literature, and presents the hypotheses. Section 3 details the research methodology. Section 4 analyzes and explains the results, while Section 5 discusses the findings, their implications, and limitations. Finally, Section 6 concludes the study.

2. Theory, Literature, and Hypothesis

2.1. Theoretical Background

This study is grounded in a legitimacy–stakeholder theoretical framework. According to previous research, legitimacy theory posits that organizations have certain responsibilities toward society and that their operation is shaped by the community behavior in which they operate (Suchman, 1995). It further mandates that leaders, such as managers, are accountable for ensuring that the organizations they lead are regarded as operating effectively by society, thereby facilitating successful and sustainable operations (C. M. Deegan, 2019). Thus, corporate governance plays a crucial role in exhibiting good performance to establish a good reputation and gain societal legitimacy (Octavio & Setiawan, 2024). From this perspective, organizations engage in environmental reporting not only for compliance but also to conform to society’s expectations (Akhter et al., 2023). The increased focus on sustainability and corporate social responsibility, particularly in climate change-prone areas such as China, has only increased the necessity for organizations to uphold legitimacy by proactively taking care of the environment (Grosbois & Fennell, 2022). Thus, organizations engage in CCD in response to real or expected concerns from the public or certain stakeholders, thereby ensuring their legitimacy (Pradhan et al., 2024).

Stakeholder theory suggests that organizations must consider the individuals or groups affected by their operations (Freeman, 1984). It complements legitimacy theory by asserting that an organization is bound by multiple societal contracts with stakeholders, rather than a single social contract with society (Emmanuel et al., 2023). This arises from the distinct perspectives each stakeholder holds regarding the company’s actions (C. Deegan & Unerman, 2008). Within this theoretical framework, CCD serves as an important channel through which corporations disclose their responses to stakeholders’ concerns regarding various topics, including sustainability (Octavio & Setiawan, 2024). Under stakeholder theory, all stakeholders have the right to be informed about the company’s impact on them, particularly regarding climate change (Schaltegger & Csutora, 2012). Thus, companies provide the stakeholders with climate change-related information to inform them about their environmental performance to conform to their pressures and influence their decisions and choices (Octavio & Setiawan, 2024).

2.2. Corporate Boards and CCD

Scholars are becoming increasingly interested in the effect of corporate governance on CCD. Earlier investigations showed that good corporate governance can improve environmental disclosure and ESG involvement (Cong & Freedman, 2011; Kumar et al., 2024). The structure and characteristics of corporate governance can shape the extent and transparency of environmental disclosures (Liao et al., 2015; Sun et al., 2025). Board composition and characteristics are among the most discussed subjects in corporate governance and CCD. For instance, the presence of independent directors on the board has a positive impact on environmental disclosure because they are considered more informed, more experienced, and have greater knowledge concerning climate change issues than other board members (Alsaifi, 2021; Amran et al., 2014; Luo et al., 2012; Ooi et al., 2019; Principale & Pizzi, 2023; Mkadmi & Daafous, 2025). Board size is also positively related to the extent of corporate disclosure, especially CCD (Octavio & Setiawan, 2024). Additionally, board expertise and board human capital have a significant positive impact on CCD (Mehedi et al., 2024). Furthermore, board gender diversity is another board composition characteristic that plays an important role in shaping environmental disclosure (Tingbani et al., 2020; Khalid et al., 2026; Gull et al., 2026). The presence of female directors on the board can bring a more social and environmentally inclined perspective to the decision-making process. Female directors enhance the firm’s awareness of environmental issues, making the company successful in incorporating climate change reduction actions and disclosures (Kılıç & Kuzey, 2019; Park et al., 2023; Tingbani et al., 2020; Toukabri & Mohamed Youssef, 2023). Moreover, the presence of women on the audit committee enhances environmental disclosure (Abbasi et al., 2024). Similarly, the presence of an environmental committee can encourage the company to recognize environmental responsibility and advise it to share climate-related information with external stakeholders (Jaggi et al., 2018; Adam et al., 2025). Thus, environmental committees increase transparency concerning companies’ environmental practices, including climate change activities (Baalouch et al., 2019). Furthermore, audit committees represent a significant determinant of CCD. According to previous studies, audit committee characteristics, such as size, expertise, and independence, have a substantial impact on internal corporate governance and are viewed as enhancing environmental disclosure (Al-Shaer & Zaman, 2018; Karim et al., 2021; Saha et al., 2025; Santonastaso et al., 2026). As the audit committee monitors the financial and nonfinancial reporting, members of this committee affect the effectiveness of this monitoring process (Budiharta & Kacaribu, 2020; Tingbani et al., 2020). This monitoring process also affects climate change-related disclosure (Baalouch et al., 2019; Karim et al., 2021).

Despite the increasing interest in the role of corporate boards in CCD in the accounting and management literature, several board attributes have yet to be studied (Borghei, 2021; Gerged et al., 2023; Johnson et al., 2023). Therefore, this study fills a research gap by investigating the effect of green boards on corporate CTD in the context of emerging economies.

2.3. GCBs and CTD

Green directors can be defined by the directors’ prior involvement in green-related education or employment, including having academic degrees in environmental engineering or environmental sciences, or working in a position within environmental departments or committees (Z. Liu et al., 2024). We may argue that green directors can affect corporate CTD in several ways. First, from a stakeholder perspective, green directors are experienced in environmental issues and recognize the environmentally inclined stakeholder concerns and pressure. Therefore, directors with a green background focus on the environmental concerns of the stakeholders and drive the company to focus on actions and strategies that minimize the climate change impacts, hence improving the environmental performance (Li et al., 2020; Asad et al., 2023). Eventually, this experience contributes to a better understanding of how the company will manage climate change issues. Furthermore, green directors function as proactive damage strategists, meticulously assessing the reputational risks and repercussions linked to inadequate management performance or imprecise environmental disclosures, resulting in a transparent, accurate, and honest disclosure (Jung et al., 2021; Z. Liu et al., 2024). Compared with directors lacking environmental expertise, green directors exhibit a deeper understanding and proficiency regarding environmental and climate change issues; therefore, they can evaluate where key environmental issues are and should be disclosed, ensuring transparent disclosure (Park et al., 2023; Z. Liu et al., 2024).

Second, green directors enhance the overall effectiveness of the board in addressing climate change issues (Ben-Amar & McIlkenny, 2015; Khalid et al., 2025a). These directors bring valuable environmental expertise, which drives the board to prioritize climate-related concerns. By advocating for environmentally responsible strategies, green directors influence managerial intentions to disclose climate change targets transparently. This advocacy, in turn, signals a clear commitment to stakeholders, demonstrating the company’s proactive stance on mitigating climate risks and aligning its operations with global sustainability goals. Their involvement ensures that climate issues are not only discussed but are also embedded in the company’s strategic vision, leading to more robust CCD and greater accountability (Asad et al., 2023; Jung et al., 2021; Lin & Cui, 2024).

Finally, directors with environmental knowledge are likely to be familiar with global reporting mechanisms, including the Task Force on Climate-related Financial Disclosures (TCFD), the Global Reporting Initiative, and the Sustainability Accounting Standards Board (Khalid et al., 2025a). Their presence on the corporate board can influence the company to align its CTD with these globally recognized standards, increasing the scope and reliability of the disclosures (Peters & Romi, 2015). Thus, based on the above discussion, we propose the following hypothesis:

H1. 

GCBs positively influence CTD.

2.4. Moderating Role of EIs

EIs are a type of institutional investors that have more environmentally sustainable characteristics than general investors (H. Tang et al., 2024a). EIs are more likely to advocate for environmentally friendly investment projects within companies (Shi et al., 2024), encourage listed companies to fulfill their environmental responsibilities (Xu et al., 2021), and advocate for eco-friendly operations, thus maximizing company profits (Barnea et al., 2005). The unique investment objective of EIs is to support companies committed to environmental sustainability while anticipating a reduction in their own risk and a share of the investment returns (Heinkel et al., 2001). Institutional investors typically evaluate companies’ creditworthiness and social responsibility, while EIs favor environmentally responsible firms or the green bond market (J. Feng & Yuan, 2024; Sangiorgi & Schopohl, 2021). Therefore, companies with green corporate governance (C. Chen et al., 2024) attract such investors. EIs prioritize environmental responsibility in their fund investments; thus, they need to assess several performance dimensions, such as economic, social, and environmental factors (C. Chen et al., 2024; Toumi, 2026). They play a crucial role in monitoring corporate governance functions and development by promoting economic growth and environmental protection (Sangiorgi & Schopohl, 2021). Therefore, EIs focus on environmental monitoring standards and climate change actions, such as pollution control measures and ecological protection, when selecting investment targets (Flammer, 2021). Consequently, corporations with more environmentally responsible boards and management are more aligned with the EIs’ strategies, which makes them more attractive to these investors (C. Chen et al., 2024).

Corporations with environmentally responsible management and boards might be inclined to increase their internal environmental investments and strategically mitigate climate change risks (Asad et al., 2023; Jung et al., 2021). According to signaling theory (Connelly et al., 2011), such actions convey a strong signal of the company’s dedication toward environmental protection and compliance with sustainable practices (C. Chen et al., 2024). Additionally, signaling theory posits that firms convey signals to investors in the capital market through specific behavior (Lys et al., 2015). Therefore, the presence of green directors on the board or the appointment of green managers indicates the company’s long-term strategic development path, which aligns with the EIs’ objectives. By disclosing the status of a green corporate governance structure, companies communicate substantially more climate change-related information to investors (L. Feng & Huang, 2025). As a result, information asymmetry between companies and investors is reduced (Jung et al., 2021). Consequently, EIs are attracted to firms that possess a green governance framework because this framework aligns with their long-term development objectives. We contend that the presence of EIs enhances the company’s environmental responsibility by shaping its long-term development strategies, thereby increasing the impact of board directors on CTD. Thus, we hypothesize that

H2. 

EIs positively moderate the relationship between GCBs and CTD.

2.5. Mediating Role of CEA

CEA refers to the firm’s willingness to prioritize and include environmental issues in its decision-making process and business strategies. CEA can reflect the company’s commitment to addressing climate change. Previous studies explain CEA through the involvement of management and executives in environmental protection, such as green innovation (D. Huang et al., 2024), environmental violations (Dong et al., 2024), ESG performance (Deng et al., 2024), emission performance (Lin & Cui, 2024), and corporate sustainable development. Companies that pay attention to environmental protection tend to have improved environmental performance (Lin & Cui, 2024), invest more in green technologies (D. Huang et al., 2024), and have reliable and transparent environmental disclosure (Z. Liu et al., 2024). Furthermore, these companies exhibit a deep commitment to environmental protection and mitigate environmental damage even if it requires lower production levels (J. Tang et al., 2024b). Companies that demonstrate strong environmental attention are regarded as environmentally responsible; therefore, their actions are legitimized and aligned with stakeholders’ expectations.

Green directors have more environmental concerns and a stronger willingness to protect the environment (Z. Liu et al., 2024). They can shape the environmental attention of the company by orienting the corporate attention to the stakeholders’ environmental concerns (Asad et al., 2023). As green directors have more profound knowledge and expertise on issues related to the environment, they can develop the knowledge structure of the decision-making process of the company (Asad et al., 2023). Therefore, assuming that the green board will direct the company’s attention to climate change issues and reinforce its green awareness and environmental responsibility sense is reasonable (Lin & Cui, 2024). From a stakeholder–legitimacy perspective, CEA indicates that the company is conscious of stakeholders’ environmental concerns and tends to take action to address them, which helps it gain social legitimacy. Companies that pay attention to environmental risks are likely to disclose climate change-related information to respond to stakeholder demands (Z. Liu et al., 2024). By disclosing climate change targets, companies can show their commitment to environmental stakeholders, thereby obtaining recognition and support and legitimizing their actions. Thus, we propose that directors’ green background shapes CEA and enhances corporate environmental responsibility, which in turn drives CTD.

H3. 

CEA mediates the relationship between GCBs and CTD.

3. Methodology

3.1. Sample and Data

The study focuses on China’s A-share listed companies from 2010 to 2022. We utilize the China Stock Market and Accounting Research (CSMAR) database as the primary data source. CSMAR has incorporated a carbon disclosure index for Chinese listed firms, which is constructed in alignment with the recommendations of the TCFD, using a framework for this index based on the “Four Elements” of governance, strategy, risk and opportunity, and indicators with objectives. Moreover, CSMAR refers to the IFRS S2 Climate-Related Disclosures of the International Sustainability Standards Board. This database also allows us to obtain CTD data for empirical analysis. Finally, data relating to financial and nonfinancial variables are also sourced from CSMAR. To obtain the final research sample, we exclude nonfinancial firms, firms with ST or PT status, and missing observations. This filtration leads us to a final sample of 26,397 firm–year observations available for empirical analysis.

3.2. Variables

3.2.1. Explained Variable

Most of the prior studies use a dichotomous or an ordinal variable to measure the likelihood of corporations’ setting climate change targets (Appio et al., 2021; Byrd et al., 2020; Dahlmann et al., 2019; Shen et al., 2020). The abovementioned proxies only determine the presence or absence of targets, which could limit the understanding of the extent of corporate commitment to climate change (Wright & Nyberg, 2017). Therefore, we measure the extent of CTD based on four categories: carbon reduction targets, other environmental targets, emission reduction measurement targets, and business transformation targets. Carbon reduction targets suggest that firms pledge to reduce carbon dioxide emissions, with the ultimate goal of reaching zero emissions (Hadziosmanovic et al., 2022). Other environmental targets are goals related to environmental issues, such as increasing the efficiency of energy-saving technologies and using renewable energy sources. Emission reduction measurement targets emphasize the monitoring and assurance process, including the adoption of global accounting standards for the reporting and verification of emissions (Shen et al., 2020). Ultimately, business transformation targets indicate a strategic pivot toward sustainable practices, including the use of low-carbon technologies and the transition to environmentally friendly models (W. Chen, 2023). We argue that this classification offers a comprehensive perspective on corporate responsibility related to climate change. In the empirical investigation, we calculate CTD as the rate of the disclosure index value presented in

Table A1. CTD based on CSMAR scoring criteria.

Targets	Criteria	Scores
Carbon mitigation targets	No targets = 0; qualitative = 2; quantitative = 4	0–4
Other climate-related targets (i.e., energy conservation, etc.)	No targets = 0; targets disclosed = 2	0–2
Targets to establish emission reduction measures targets	No targets = 0; qualitative = 2; quantitative = 4	0–4
Targets related to business transformation progress towards climate change management	No targets = 0; qualitative = 2; quantitative = 4	0–4
	Total score	0–14

. This transformation enables a precise evaluation of the different types of CTD, ensuring a comprehensive understanding of data distribution while minimizing potential skewness (Masatlioglu et al., 2023).

3.2.2. Explanatory Variable

Green corporate boards (GCBs) refers to the presence of directors on corporate boards with environmental backgrounds and expertise (Ledgerwood, 2017). To operationalize green boards, we use the personal résumés of directors, which are available on the Sina Finance website in China1. We categorize directors as having an environmental background if their résumés include the following keywords: “environment”, “environmental protection”, “new energy”, “clean energy”, “ecology”, “low carbon”, “sustainability”, “energy-saving”, or “green” (Asad et al., 2023). This categorization ensures an appropriate measure of environmental qualification of directors, which has also been followed by prior researchers (Cosma et al., 2021; Jung et al., 2021). For empirical analysis, we calculate the proportion of green directors to quantify the overall presence of an environmentally focused board.

3.2.3. Moderating Variable

The entry of EIs serves as a moderator in this research. Following prior studies (J. Feng & Yuan, 2024; L. Feng & Huang, 2025; Zhou & Jin, 2023), we use the fund market series section of the CSMAR database to operationalize EIs. First, “fund information details” are matched with “stock investment details” to obtain fund information on investments in listed companies. Second, the scope and objectives of each investment are manually sourced to identify whether there are terms related to “environmental protection”, “ecological”, “green”, “low-carbon”, “new-energy”, “renewable energy”, “clean development,” “sustainable,” and “energy-saving” (Jiang et al., 2021). Finally, if any of the specified terms are identified, the investment is classified as an EIs. We quantify the number of investors associated with each firm. The logarithmic value (plus one) of the number of EIs serves as the primary proxy. We also employ a dummy variable that takes the value of 1 if at least one EI enters the firm each year, and 0 otherwise.

3.2.4. Mediating Variable

CEA is suggested as a mediating mechanism by which green boards influence CTD. CEA is assessed by a text analysis methodology utilizing Python 3.10 as the machine learning framework. This method enables us to obtain a thorough comprehension of business aims, strategic perspectives, and reactions to specific challenges (Loughran & McDonald, 2016). Thus, based on prior research (Deng et al., 2024; Lin & Cui, 2024; Z. Liu et al., 2024), text analysis is conducted using keywords2 related to the environmental attention in the Management Discussion and Analysis (MD&A) section of annual reports. We utilized the MD&A section of annual reports to obtain information regarding the managerial emphasis on environmental consciousness and sustainability. The MD&A effectively captures attention, as it conveys managerial discretion and a forward-looking narrative concerning strategic aims and risks (D. Huang et al., 2024; Davis & Tama-Sweet, 2012). Our theoretical framework for the operationalization of MGA is based on an attention-based perspective on the company (Ocasio, 1997). This implies that the topics decision-makers focus their limited attention on may influence organizational outcomes. MGA manifests itself not just in internal cognitive processes but also in the aspects that leaders opt to emphasis in strategic communication. Consequently, the examination of MD&A sections can garner significant attention. The extent of environmental attention is determined on the basis of the frequency of keywords in the MD&A sections of the annual reports (Wang et al., 2024). The higher the presence of related words, the higher the extent of environmental attention among the corporations. The logarithmic value of the total words in each year is used for empirical analysis.

3.2.5. Control Variables

Following the prior literature on the determinants of corporate CCD (Caby et al., 2020; Eleftheriadis & Anagnostopoulou, 2015; Octavio & Setiawan, 2024; Prado-Lorenzo et al., 2009), we control for firm attributes and corporate governance mechanisms. First, we incorporate firm age (AGE), size (SIZE), profitability (ROA), and leverage (LEVG) to account for firm-level drivers of CCD. Second, we include board size (CBD), independence (BIND), state ownership (SOE), and CEO duality (CEOD) to control for the influence of governance mechanisms. Finally, we also control for the sector specificity and time variance by incorporating industry and year dummies.

Table 1. Variable definitions.

Variables	Symbol	Definitions
Dependent (Explained) variable
Climate Change Targets Disclosure	CTD	Logarithmic value plus one of the total disclosure scores based on CSMAR data.
Independent (Explanatory) variable
Green Corporate Boards	GCB	Ratio of independent directors with environmental background or expertise present on corporate board.
Moderating variable
Eco-conscious Investors	EI	Logarithmic value (plus 1) of total green investors.
Mediating variable
Corporate Environmental Attention	CEA	Logarithmic value of total number of keywords in MD&A section of annual reports.
Control variables
Firm Age	AGE	Difference between current year and establishment date of the company.
Firm Size	SIZE	Natural logarithm of the total employees of the company at the end of year.
Firm Profitability	ROA	Ratio of total profit to total assets of the company at the end of year.
Firm Leverage	LEVG	Ratio of total debts to total shareholders’ equity at the end of year.
Board Size	BSIZE	Natural logarithm of total directors of the company at the end of year.
Board Independence	BIND	Ratio of independent directors to total director of the company.
State Ownership	SOE	Dummy variable represents ‘1’ if government owned majority shares of the company and ‘0’ otherwise.
CEO Duality	CEOD	Dummy variable represents ‘1’ if CEO is also the chairman of the company and ‘0’ otherwise.
Corporate Sustainable Performance	CSP	Total sustainability performance scores of the company based on the HEXUN rankings.

provides the definitions of all the variables.

3.3. Empirical Models

To test H1 empirically, i.e., to investigate the influence of green boards on CCTD, we employ the following regression model:

$${CTD}_{it}={\beta }_0+{{\beta }_{1}GCB}_{it}+{\beta }_i {Controls}_{it} +\sum {Sector}_{it}+\sum {Year}_{it}+ {\epsilon }_{it}$$

(1)

In the above model, ${CTD}_{it}$ is the dependent variable representing the extent of climate change target disclosure. ${GCB}_{it}$ represents the main explanatory variable, which is the presence of directors with environmental backgrounds on corporate boards. The inclusion of the control variables is denoted by ${Controls}_{it}$. Moreover, we include industry and time-fixed effects, represented by $\sum {Sector}_{it}$ and $\sum {Year}_{it}$ respectively, to control for unobserved heterogeneity across different sectors and years. The error term ${\epsilon }_{it}$ captures any remaining variability, ensuring that our model accurately reflects the complexities of firms’ disclosure behavior. For the validation of H1, ${\beta }_1$ should be positive and statistically significant.

To investigate the moderating effect of EIs empirically, we employ the following model:

$$\begin{gathered} {CTD}_{it}={\beta }_0+{\beta }_1{GCB}_{it}+{\beta }_2{EIs}_{it}+{\beta }_{3}GCB\times {EIs}_{it}+{\beta }_i{Controls}_{it} \\ +\sum {Sector}_{it}+\sum {Year}_{it}+ {\epsilon }_{it}. \end{gathered}$$

(2)

In Equation (2), ${EIs}_{it}$ represents the involvement of EIs as a moderating variable. To validate H2, β_3 must be positive and statistically significant.

To examine the mediating role of CEA, we adhere to the methodology established by Baron and Kenny (1986). We assert that green boards affect CTD by enhancing CEA. First, a significant positive relationship between GCB and CTD should be established using Equation (1). Second, we estimate the effect of GCB on CEA to determine the role of green directors on CEA. We expect a positive and statistically significant coefficient for GCBs while estimating Equation (3). Finally, Equation (4) is estimated using GCB and CEA to assess their impact on CTD and to evaluate the mediating function of CEA. We anticipate that the coefficient for GCBs in Equation (4) will be either insignificant or smaller than the coefficient in Equation (1), which indicates a complete or partial mediating effect of CE.

$${CEA}_{it}={\beta }_0+{{\beta }_{1}GCB}_{it}+{\beta }_i {Controls}_{it} +\sum {Sector}_{it}+\sum {Year}_{it}+ {\epsilon }_{it}$$

(3)

$${CTD}_{it}={\beta }_0+{{\beta }_{1}GCB}_{it}+{{\beta }_{2}CEA}_{it}+{\beta }_i {Controls}_{it} +\sum {Sector}_{it}+\sum {Year}_{it}+ {\epsilon }_{it}$$

(4)

To address the presence of spurious outliers in our data, we winsorize all continuous variables at the first percentile at both tails.

4. Results

4.1. Descriptive Results

Table 2. Descriptive statistics.

Variables	N	Mean	SD	Min	Med	Max
CDT	26,397	0.40	0.26	0.00	0.43	1.00
GCB	26,397	0.12	0.17	0.00	0.11	1.00
EI	26,397	0.66	0.85	0.00	0.00	4.39
EI_dum	26,397	0.48	0.50	0.00	0.00	1.00
CEA	26,397	1.97	0.68	0.00	1.95	3.85
AGE	26,397	8.48	7.22	0.00	6.00	27.00
SIZE	26,397	7.65	1.21	4.80	7.55	11.14
ROA	26,397	0.05	0.04	0.00	0.04	0.22
LEVG	26,397	0.15	0.26	0.00	0.04	1.58
BSIZE	26,397	2.09	0.28	0.00	2.20	2.89
BIND	26,397	0.38	0.07	0.19	0.38	0.80
SOE	26,397	0.10	0.30	0.00	0.00	1.00
CEOD	26,397	0.31	0.46	0.00	0.00	1.00
CSP	26,397	60.67	7.40	31.45	60.51	95.16

Note: For variable definitions, see Table 1.

presents the summary statistics of the variables included in this study. The mean of CTD indicates a moderate degree of disclosures, suggesting diversity among corporations in articulating their climate change commitments. The low mean of GCB indicates that only a modest proportion of enterprises employ eco-conscious directors. The EI results indicate that a significant number of enterprises have attracted green investors over the year. The CEA statistics indicate heterogeneity among enterprises in terms of environmental attention.

Additionally, Table 2 displays the outcomes of pairwise correlation and variance inflation factor (VIF) coefficients. The data indicate a robust positive relationship between GCB and CCTD. However, no multicollinearity issues have been identified because the VIF coefficients of the predictors remain below the threshold of five (Stock & Watson, 2015).

4.2. Main Results

Table 3. Main results.

Variables	(1)	(2)	(3)
	CTD	CTD	CTD
GCB	0.2406 ***	0.1761 ***	0.1883 ***
	(0.0090)	(0.0088)	(0.0080)
AGE		0.0031 ***	0.0019 ***
		(0.0002)	(0.0002)
SIZE		0.0352 ***	0.0314 ***
		(0.0014)	(0.0013)
ROA		0.0017	−0.1752 ***
		(0.0361)	(0.0332)
LEVG		0.0604 ***	0.0765 ***
		(0.0062)	(0.0058)
BSIZE		−0.0821 ***	0.0265 ***
		(0.0063)	(0.0063)
BIND		−0.1606 ***	−0.0630 ***
		(0.0202)	(0.0189)
SOE		0.0278 ***	0.0433 ***
		(0.0052)	(0.0047)
CEOD		−0.0129 ***	−0.0221 ***
		(0.0032)	(0.0030)
CSP		0.0098 ***	0.0080 ***
		(0.0002)	(0.0002)
Constant	0.3674 ***	−0.2875 ***	−0.5293 ***
	(0.0019)	(0.0217)	(0.0214)
Sector FE	No	No	Yes
Year FE	No	No	Yes
Observations	26,397	26,397	26,397
R-squared	0.02	0.19	0.31

Note: For variable definitions, see Table 1. Robust standard errors in parentheses: *** p < 0.01.

presents the regression results based on Equation (1). We employ a stepwise incorporation of various controls and fixed effects in the estimated regression results. Column (1) displays the results for the impact of GCBs on CTD, excluding the incorporation of controls. In Column (2), the controls are added, and the model is re-estimated using Equation (1). In Column (3), industry and year dummies, together with control variables, are used to assess the impact of GCBs on CTD. All three models have positive and statistically significant coefficients, valued at 0.2406, 0.1761, and 0.1883, respectively (H1 is supported). The findings indicate that corporations with green boards are more likely to strengthen their corporate commitments toward climate change management. Therefore, GCBs can alleviate the pressure of environmentally inclined stakeholders, gaining the company’s social legitimacy (Emmanuel et al., 2023; Pradhan et al., 2024). These results complement and extend the findings of previous researchers by indicating that the environmental backgrounds of corporate leadership accelerate the degree of corporate sustainability practices (Asad et al., 2023; Cosma et al., 2021; Jung et al., 2021; Walls & Hoffman, 2013).

4.3. Moderation Results

Table 4. Moderation results.

Variables	(1)	(2)
	CTD	CTD
GCB	0.1600 ***	0.1582 ***
	(0.0108)	(0.0121)
EI	0.0139 ***
	(0.0022)
GCB × EI	0.0244 ***
	(0.0086)
EI_dum		0.0135 ***
		(0.0034)
GCB × EI_dum		0.0475 ***
		(0.0160)
Constant	−0.4992 ***	−0.5137 ***
	(0.0216)	(0.0215)
Controls	Included	Included
Sector FE	Yes	Yes
Year FE	Yes	Yes
Observations	26,397	26,397
R-squared	0.32	0.31

Note: For variable definitions, see Table 1. Robust standard errors in parentheses: *** p < 0.01.

illustrates the effects of the moderating influence of EIs on the relationship between green boards and CTD. The empirical findings are derived from two distinct proxies for EIs. Column (1) presents a statistically significant positive coefficient for GCB × EI (0.0244) at the 1% level, utilizing the primary proxy for EI (Table 1). Column (2) indicates a statistically significant positive coefficient for GCB × EI_dum (0.0475) at the 1% level, when employing a dummy variable (ECI_dum) as an alternative proxy for the entry of EIs. These findings indicate that the presence of EIs enhances the positive impact of green boards on disclosing climate change targets for companies (Hypothesis 2 is supported). Such actions convey a strong signal of the company’s dedication to environmental protection and compliance with sustainable practices (C. Chen et al., 2024). From the signaling theory perspective, the presence of green directors on the board or the appointment of green managers indicates the company’s long-term strategic development path, which aligns with the EIs’ objectives. These results extend prior research on the monitoring role of EIs to support corporate environmental sustainability development (J. Feng & Yuan, 2024; L. Feng & Huang, 2025; Zhou & Jin, 2023).

4.4. Mediation Results

Table 5. Mediation results.

Variables	(1)	(2)
	CEA	CTD
GCB	0.8841 ***	0.0721 ***
	(0.0228)	(0.0076)
CEA		0.1315 ***
		(0.0021)
Constant	0.7276 ***	−0.6250 ***
	(0.0568)	(0.0198)
Controls	Included	Included
Sector FE	Yes	Yes
Year FE	Yes	Yes
Observations	26,397	26,397
R-squared	0.21	0.41

Note: For variable definitions, see Table 1. Robust standard errors in parentheses *** p < 0.01.

presents the findings of the mechanism analysis employed to delineate the pathway by which green boards affect CTD. Using Equation (3), Column (1) estimates the direct impact of green boards on CEA. The statistically significant and positive coefficient for GCBs (0.8841) indicates that the inclusion of green directors on corporate boards enhances CEA. The mediation is estimated in Column (2) using Equation (4). The coefficient for CEA is positive and statistically significant at 0.1315, while the coefficient for GCBs is also positive and statistically significant at 0.0721, albeit with a smaller magnitude than that reported in Table 3. These findings validate a partial mediation effect of CEA in the relationship between green boards and CTD (H3 is partially supported). From a stakeholder–legitimacy perspective, these results indicate that the company is conscious of the stakeholders’ environmental concerns and tends to take action to address them and, as a result, gain social legitimacy. These results complement prior studies that examine the role of CEA (Dong et al., 2024; R. Huang & Wei, 2023; Lin & Cui, 2024).

4.5. Robustness Results

Table 6. Robust results.

Variables	Alternate Proxy for GCB	Alternate Proxy for CDT	First Lag of CTD	Second Lag of CTD
	(1)	(2)	(3)	(4)
	CTD	CTD_log	CTD(t+1)	CTD(t+2)
GCB	0.0237 ***	0.5471 ***	0.1743 ***	0.1590 ***
	(0.0010)	(0.0217)	(0.0087)	(0.0091)
Constant	−0.4948 ***	−0.9485 ***	−0.5622 ***	−0.5171 ***
	(0.0215)	(0.0641)	(0.0228)	(0.0242)
Controls	Included	Included	Included	Included
Sector FE	Yes	Yes	Yes	Yes
Year FE	Yes	Yes	Yes	Yes
Observations	26,397	26,397	20,158	16,938
R-squared	0.31	0.24	0.28	0.25

Note: For variable definitions, see Table 1. Robust standard errors in parentheses: *** p < 0.01.

displays the results of the sensitivity analysis conducted to assess the robustness of our main findings. First, we employ the number of directors on corporate boards as an alternative proxy for GCBs. Second, we use the logarithmic value of CTD as an alternative proxy for the dependent variable. Third, we employ the first and second lags of CTD to assess the impact of GCBs on CTD on the basis of the approach suggested by Wilkins (2018). Columns (1) to (4) present the empirical results with positive and statistically significant coefficients of GCB, indicating that the findings remain consistent with the primary results.

4.6. Heterogeneity Results

Table 7. Heterogeneity results.

Variables	Sector Sensitivity		Sustainable Performance
	High	Low	High	Low
	(1)	(2)	(3)	(4)
	CTD	CTD	CTD	CTD
GCB	0.2577 ***	0.1719 ***	0.1723 ***	0.2203 ***
	(0.0159)	(0.0093)	(0.0101)	(0.0131)
Constant	−0.6500 ***	−0.4656 ***	−0.0966 ***	−0.5693 ***
	(0.0530)	(0.0235)	(0.0278)	(0.0365)
Controls	Included	Included	Included	Included
Sector FE	No	No	Yes	Yes
Year FE	Yes	Yes	Yes	Yes
Observations	4554	21,843	13,247	13,150
R-squared	0.31	0.28	0.26	0.25

Note: For variable definitions, see Table 1. Robust standard errors in parentheses: *** p < 0.01.

presents the cross-sectional results. First, we use China Securities and Regulatory Commission (2012) guidelines to categorize our sample into carbon-sensitive and nonsensitive sector firms. This categorization allows us to investigate the influence of green boards on CTD under varying industrial structures. Columns (1) and (2) display positive and statistically significant coefficients for GCB, indicating that the inclusion of green directors increases the level of CTD; however, the coefficient’s magnitude is greater for firms in sensitive industries. The results indicate that given the increased environmental oversight and external pressures on sensitive sector enterprises (Khalid et al., 2024a), these companies derive greater benefits from green governance and legitimize their actions in the eyes of stakeholders (Jiang et al., 2021).

Second, we employ the median firm sustainability performance scores from the HEXUN ratings to break down our sample into high and low performance levels. Columns (3) and (4) exhibit the positive and statistically significant coefficients for GCBs. The impact of green boards on CTD is especially significant for firms with poor sustainability performance. The results indicate that underperformers encounter significant external pressures from stakeholders to improve their environmental sustainability. The inclusion of green directors improves expertise and strengthens corporate commitments to climate change (Ledgerwood, 2017).

4.7. Endogeneity Results

To address endogeneity caused by reverse causality, where CTD may influence GCBs, such as firms with a high level of CTD tending to hire more directors with environmental backgrounds, we use the lag of the independent variable (lag_GCB) to mitigate this bias (Bellemare et al., 2017). The results in Column (1) of

Table 8. Endogeneity results.

Variables	Lag of GCB	Two-Stage Least Squares		Heckman	DID Estimation
	(1)	(2)	(3)	(4)	(5)
	CTD	GCB	CTD	CTD	CTD
lag_GCB	0.1840 ***	0.9417 ***
	(0.0091)	(0.0039)
GCB			0.1954 ***	0.1884 ***
			(0.0097)	(0.0080)
MILLS				0.0396 *
				(0.0217)
DID					0.0150 ***
					(0.0036)
Constant	−0.5307 ***	−0.0131	−0.5282 ***	−0.5936 ***	−0.5347 ***
	(0.0238)	(0.0123)	(0.0240)	(0.0420)	(0.0216)
Controls	Included	Included	Included	Included	Included
Sector FE	Yes	Yes	Yes	Yes	Yes
Time FE	Yes	Yes	Yes	Yes	Yes
Observations	20,158	20,158	20,158	26,397	26,397
R-squared	0.3127	0.8453	0.3119	0.3122	0.2984
Kleibergen-Paap rk LM statistic			1860.439
Cragg-Donald Wald F statistic			110,000
Kleibergen-Paap rk Wald F statistic			57,000
Stock-Yogo weak ID test critical values: 10% maximal IV size			16.38

Note: For variable definitions, see Table 1. Robust standard errors in parentheses: *** p < 0.01, * p < 0.1.

are consistent with our primary findings, confirming the considerable influence of green boards on CTD.

In addition, to assess the influence of omitted variable bias in our investigation, we adopt the two-stage least squares method with lag_GCB as the instrumental variable (IV). This approach allows us to capture the potential effect of unobserved factors in our estimation (Baum et al., 2007). In the first stage, IV is used to estimate the endogenous variable, capturing exogenous variation. These estimated values are subsequently utilized as regressors in the second stage, enabling the attainment of consistent and unbiased coefficient estimates (Semykina & Wooldridge, 2010). The results of both estimations are presented in Columns (2) and (3) of Table 8.

To address endogeneity resulting from selection bias in our research, we employ the Heckman (1979) selection model. The voluntary nature of CTD data implies that the decision to reveal climate change targets in CSR reports is at the discretion of management. Thus, a bias may emerge when the decision to publish climate change targets in CSR reports is influenced by unobservable factors. This approach is evaluated in two stages. First, we assess the likelihood of CTD (a binary variable indicating CTD exceeds 1) using probit regression. Second, we assess the impact of GCB on CTD using the inverse Mills ratio (IMR), derived from the first-stage probit regression. The inclusion of IMR mitigates potential selection bias and enables accurate estimation of the relationship between GCB and CTD. The second-stage results are presented in Column (4) of Table 8.

Finally, we implement a difference-in-differences (DID) design to examine the entry of green directors. We identify firms that transition from having no green directors to at least one and define this change as a treatment event. The treated variable equals 1 when such a transition occurs and 0 otherwise, whereas post equals 1 for all years after the first appointment and 0 in all other years. We then estimate a firm fixed-effects DID model, where the interaction term (treated × post) captures the causal effect of the entry of green directors on CTD. The results are presented in Column (4) of Table 8. Based on all of the above endogeneity techniques, the results remain robust and consistent with our baseline findings.

5. Discussion

To the best of our knowledge, this research is among the first to examine the impact of directors’ green background on CTD in an emerging economy context. The findings demonstrate that green directors encourage companies to exhibit long-term commitments to ecological concerns by reporting climate targets in response to stakeholders’ demands and to gain legitimacy. Moreover, findings suggest that EIs are attracted to environmentally responsible companies. Therefore, green directors on the board align with EIs’ investment strategies, leading to transparent environmental disclosure. Hence, EIs enhance the effect of green directors on CTD. In addition, mechanism analysis reveals that green directors enhance CEA by directing corporate focus toward stakeholders’ environmental concerns, thereby enhancing CTD. Thus, this study provides evidence of the direct and indirect effects of green directors on CTD. Finally, the heterogeneity results show that the effect of green directors on CTD is more pronounced in carbon-sensitive sector firms, indicating that increased environmental oversight and external pressure enhance the effects of green governance and legitimize corporate actions in the eyes of stakeholders. Furthermore, findings indicate that firms with poor sustainability performance face strong external pressures from stakeholders to improve their environmental sustainability; hence, the inclusion of green directors strengthens corporate commitments to climate change issues.

5.1. Theoretical Implications

This research contributes to the theoretical landscape by enriching the stakeholder legitimacy framework within the environmental disclosure context. By applying stakeholder legitimacy theory, this research offers valuable insights into the role of green directors on the board as a strategic mechanism for aligning corporate environmental disclosure with the pressure and expectations of stakeholders and society. Green directors enhance CTD and thereby address stakeholders’ demand for transparency regarding environmental issues. Meanwhile, such directors enhance the firm’s legitimacy by implementing environmental priorities into corporate practices and, accordingly, strengthening the company’s public image as environmentally responsible. This approach highlights the function of green directors as agents who leverage their green expertise to attract EIs, thereby enhancing the company’s commitments to environmental concerns and alignment with stakeholders’ expectations. Moreover, this study expands the stakeholder–legitimacy framework by demonstrating that green governance that prioritizes environmental responsibility meets stakeholder demands and enhances long-term legitimacy, shedding light on the significance of sustainable governance structure in corporate environmental accountability.

5.2. Policy and Practical Implications

This research contributes to the theoretical landscape by enriching the stakeholder legitimacy framework within the environmental disclosure context. By applying stakeholder legitimacy theory, this research offers valuable insights into the role of green directors on corporate boards as a strategic mechanism for aligning corporate environmental disclosure with stakeholder and societal expectations. Green directors enhance CTD and thereby address stakeholders’ demand for transparency regarding environmental issues. Meanwhile, such directors enhance firm legitimacy by integrating environmental priorities into corporate practices, thereby strengthening the company’s public image as environmentally responsible. This approach highlights the function of green directors as agents who leverage their green expertise to attract EIs, thereby enhancing the company’s commitments to environmental concerns and alignment with stakeholders’ expectations. Moreover, this study expands the stakeholder–legitimacy framework by demonstrating that green governance that prioritizes environmental responsibility meets stakeholder demands and enhances long-term legitimacy, shedding light on the significance of sustainable governance structures in corporate environmental accountability.

5.3. Limitations and Future Research

This research, while contributing to existing literature, has limitations. This study is limited to the Chinese environment, indicating that the findings may be more widely applicable if similar characteristics are examined in other countries or contexts. Researchers should perform a thorough examination of the factors affecting CTD and evaluate the consequences for various categories of climate targets. This research delineates the degree of CTD as an indicator of company long-term environmental commitments. Researchers may examine additional environmental management strategies to evaluate organizations’ contributions to achieving global climate change targets. This study enables further research on the impact of green governance on corporate climate change commitments across diverse industries. Corporate reactions to climate change are expected to vary based on the distinct external forces encountered, particularly between environmentally sensitive and non-sensitive sectors. Examining the influence of green governance on sector-specific reactions will provide significant insights into the effectiveness of sustainability strategy and the varied business policies concerning environmental accountability.

6. Conclusions

This study investigates the influence of green governance on corporate commitment to climate change. The findings highlight the significant influence of directors with environmental backgrounds in facilitating CTD, thereby addressing stakeholder demands and enhancing legitimacy. This research provides insights into how boards of directors utilize environmental experience to enhance corporate long-term commitments to climate change through information disclosure. This study presents several implications; for example, companies may benefit from prioritizing the appointment of directors with green experience to attract EIs and enhance overall performance. Furthermore, green directors improve internal governance by elevating CEA and directing corporate focus toward climate change issues, thereby enhancing sustainability.