From Governance to Recognition: How Corporate Social Responsibility Committees Influence Sustainability Awards

Abstract

This study examines whether the presence of Corporate Social Responsibility (CSR) committees enhances firms’ likelihood of receiving sustainability awards and investigates the moderating roles of corporate sustainability strategy and environmental, social, and governance (ESG) performance. The findings indicate that firms with CSR committees are significantly more likely to receive sustainability awards, highlighting the importance of board-level sustainability governance in achieving external sustainability recognition. The results further show that firms with strong sustainability strategies and superior ESG performance are more likely to receive sustainability awards regardless of whether they have a CSR committee, suggesting that substantive sustainability practices are more influential than governance structures alone in securing such recognition. Moreover, CSR committees exert their strongest influence in firms with weak or moderately developed sustainability strategies. In contrast, their incremental contribution diminishes in firms with well-established sustainability strategies and high ESG performance, where recognition is driven primarily by strategic sustainability integration and demonstrated ESG outcomes. This study contributes to the corporate sustainability and governance literature by demonstrating that while CSR committees enhance firms’ prospects of obtaining sustainability awards, their effectiveness depends on the extent to which sustainability is embedded within corporate strategy and reflected in ESG performance.

1. Introduction

Recognizing firms for their sustainability efforts through corporate social responsibility (CSR) or sustainability awards has become an important external validation mechanism that reinforces corporate commitments to sustainable business practices [1]. Sustainability awards acknowledge firms’ outstanding social and environmental achievements, enhancing their societal legitimacy and strengthening their reputation among stakeholders [2]. Consequently, firms actively pursue such recognition to gain stakeholder support [3,4,5], enhance corporate reputation [6,7], increase firm value [2,8], encourage higher-quality CSR disclosure [9], and demonstrate stronger environmental commitment [1]. Moreover, firms receiving CSR recognition often benefit from lower financing costs and improved access to capital because sustainability awards reduce perceived investment risk and increase stakeholder confidence [10]. Reflecting their growing importance, the number of CSR- and ESG-related awards increased by more than 40% between 2015 and 2021 [11], while institutional investors increasingly incorporate Sustainability awards and ESG assessments into their investment decisions, with approximately 77% considering such measures when evaluating firms [12]. Collectively, these developments demonstrate that Sustainability awards have evolved into an influential benchmark of corporate sustainability performance and credibility.

Beyond serving as symbolic recognition, sustainability awards (Examples of CSR and sustainability awards include the Global CSR Excellence & Leadership Awards, the SEAL Business Sustainability Awards, Reuters Responsible Business Awards, and the CSR Excellence Awards. These awards are typically presented as trophies, plaques, certificates, or medals and are granted by a variety of organizations, including governmental agencies, professional and industry associations, non-governmental organizations, media organizations, and independent sustainability institutions. Although award criteria vary across providers, they generally recognize firms demonstrating outstanding achievements in environmental stewardship, social responsibility, corporate governance, ethical business practices, and sustainable development.) represent an important strategic asset for firms. They function as independent third-party endorsements of a firm’s sustainability achievements, reducing information asymmetry between firms and external stakeholders regarding the credibility of corporate sustainability initiatives. Consequently, sustainability awards enhance organizational legitimacy, strengthen stakeholder trust, and differentiate firms from competitors in increasingly sustainability-oriented markets. They also provide reputational benefits that may improve relationships with investors, customers, regulators, employees, and other stakeholders by signaling superior environmental and social performance. Accordingly, understanding the organizational and governance factors that increase the likelihood of receiving Sustainability awards is important not only from a theoretical perspective but also from a managerial standpoint, as firms increasingly view sustainability recognition as a source of competitive advantage rather than merely a symbolic distinction [1,2,10]. From a governance perspective, identifying the determinants of Sustainability awards also contributes to a better understanding of how internal governance mechanisms are translated into externally recognized sustainability outcomes, thereby linking corporate governance with corporate reputation and stakeholder evaluation.

Given the increasing strategic importance of sustainability awards, scholars have emphasized the role of corporate governance mechanisms in enhancing firms’ sustainability performance and external recognition. Among these mechanisms, CSR committees have attracted considerable attention because they oversee corporate social and environmental initiatives, monitor sustainability-related risks and opportunities, and facilitate the implementation of sustainability strategies [13,14,15,16,17]. Previous studies suggest that CSR committees strengthen sustainability governance by supporting the development and execution of sustainability strategies and improving firms’ ability to meet stakeholder expectations [18,19]. However, governance structures alone may not be sufficient to secure CSR recognition because awarding bodies increasingly evaluate the quality and effectiveness of sustainability initiatives rather than the mere existence of governance mechanisms [4,5]. Consequently, firms with CSR committees may still fail to receive Sustainability awards when their sustainability strategies are poorly developed or when their environmental, social, and governance (ESG) performance does not demonstrate substantive sustainability achievements [1,9].

Despite the growing body of research on CSR committees, the literature offers conflicting perspectives regarding their effectiveness. On the one hand, prior studies argue that CSR committees strengthen sustainability governance by enhancing board oversight, improving sustainability reporting, and facilitating the implementation of sustainability initiatives [13,20,21]. On the other hand, some scholars contend that CSR committees may serve primarily as symbolic governance mechanisms, allowing firms to project an image of sustainability leadership without necessarily achieving substantive sustainability outcomes [22,23]. Consistent with this view, Reference [1] argues that external sustainability recognition increasingly depends on demonstrable sustainability achievements rather than the mere existence of governance structures. These contrasting findings suggest that the effectiveness of CSR committees is unlikely to be universal but instead depends on the organizational context in which they operate. This inconsistency may explain why previous studies have not reached a consensus regarding the extent to which CSR committees contribute to external sustainability recognition and provides the primary motivation for examining whether sustainability strategy and ESG performance condition this relationship [24,25,26,27,28].

Despite the growing importance of sustainability awards, an important gap remains in the literature. Existing research has largely examined the consequences of Sustainability awards, including their effects on firm value [29], cost of capital [2], sustainability assurance [10], and ESG disclosure practices [12]. Comparatively, little attention has been devoted to understanding why some firms receive Sustainability awards while others do not. In particular, the governance determinants of CSR recognition remain underexplored. Furthermore, although prior studies have documented the positive influence of CSR committees on sustainability reporting and performance (e.g., [10,17,20]), little is known about the conditions under which CSR committees translate into external sustainability recognition [6,7]. Specifically, the literature has not examined whether the effectiveness of CSR committees depends on firms’ sustainability strategy and ESG performance. Addressing this gap is important because firms increasingly combine governance mechanisms with substantive sustainability initiatives, yet the interaction between these factors in explaining Sustainability awards remains largely unexplored.

The theoretical arguments also suggest that this relationship is likely to be contingent rather than universal. Stakeholder theory [30] proposes that firms adopt CSR initiatives to satisfy stakeholder expectations and strengthen organizational legitimacy. From this perspective, CSR committees provide a governance mechanism that enhances the credibility and coordination of sustainability activities, thereby increasing the likelihood of external recognition. However, stakeholders ultimately evaluate firms based on actual sustainability performance rather than governance structures alone. Similarly, Reference [31] suggests that CSR committees signal a firm’s commitment to sustainability, but this signal may become less influential when firms already demonstrate strong sustainability strategies and superior ESG performance. Consequently, examining the joint effects of CSR committees, sustainability strategy, and ESG performance provides a more comprehensive understanding of how firms achieve CSR recognition.

This study addresses these gaps by examining whether CSR committees increase firms’ likelihood of receiving sustainability awards and by investigating whether this relationship is moderated by corporate sustainability strategy and ESG performance. Using an international sample of 36,140 firm-year observations from non-financial firms across 23 countries and 10 industries over the period 2010–2019, this study provides one of the first large-scale international investigations into the governance determinants of Sustainability awards. Rather than viewing CSR committees as universally effective governance mechanisms, the study examines whether their effectiveness depends on the extent to which sustainability is strategically embedded within the organization and reflected in ESG performance.

The empirical findings show that firms with CSR committees are significantly more likely to receive Sustainability awards, supporting the view that board-level sustainability governance enhances external recognition. However, the findings also reveal that firms with strong sustainability strategies and superior ESG performance are more likely to receive Sustainability awards regardless of whether they have a CSR committee. Moreover, CSR committees exert their strongest influence in firms with weak or moderately developed sustainability strategies. In contrast, their incremental contribution diminishes when sustainability is already embedded within corporate strategy and supported by strong ESG performance. These findings suggest that substantive sustainability performance ultimately outweighs governance structures in explaining CSR recognition.

This study makes three principal contributions. First, it extends the CSR award literature by shifting attention from the consequences of Sustainability awards to their governance antecedents, thereby providing new evidence on why firms receive sustainability recognition. Second, it advances the literature on CSR committees by demonstrating that their effectiveness is contingent upon firms’ sustainability strategy and ESG performance, highlighting important boundary conditions that have been largely overlooked in previous research. Third, the study contributes to stakeholder and signaling theories by showing that while CSR committees enhance organizational legitimacy and provide credible sustainability signals, governance mechanisms alone are insufficient to secure CSR recognition when substantive sustainability performance is absent. These findings offer a more nuanced understanding of how governance structures and sustainability performance jointly influence external recognition in increasingly competitive sustainability environments.

The remainder of the paper is organized as follows. Section 2 reviews the relevant literature and develops the hypotheses. Section 3 describes the research design. Section 4 presents the descriptive analyses. Section 5 reports the empirical findings. Section 6 provides additional analyses, and Section 7 concludes the paper.

2. Literature Review and Hypotheses Formulation

2.1. Conceptual Background and Theoretical Framework

CSR is viewed as a set of organizational values, principles, and activities through which firms seek to minimize the adverse social and environmental consequences of their operations while creating value for society beyond shareholders’ economic interests [32,33,34]. Accordingly, CSR extends beyond profit maximization by emphasizing ethical responsibilities and socially desirable business practices that contribute to sustainable development [35].

An important governance mechanism supporting corporate CSR is the establishment of a CSR committee at the board level. CSR committees are responsible for overseeing sustainability-related risks and opportunities, guiding the implementation of sustainability strategies, and ensuring that corporate policies are aligned with stakeholder expectations [36]. They also facilitate the development and monitoring of sustainable development policies and strengthen board oversight of environmental and social issues, thereby improving the firm’s ability to achieve long-term sustainability objectives [37].

Firms that demonstrate outstanding CSR performance may receive Sustainability awards, which constitute external recognition of exceptional achievements in environmental stewardship, community engagement, employee welfare, and philanthropic initiatives [29]. Such awards are granted by a wide range of organizations, including governmental agencies [9], environmentally and socially focused organizations [29,38], media organizations [2], and industry associations or stock-index providers [29,39,40]. Beyond recognizing superior sustainability performance, Sustainability awards enhance firms’ reputation and credibility among stakeholders, thereby encouraging firms to invest further in sustainability initiatives [2].

The effectiveness of CSR governance in achieving external sustainability recognition may depend on complementary organizational characteristics, particularly corporate sustainability strategy and environmental, social, and governance (ESG) performance. Corporate sustainability strategy refers to the integration of environmental, social, and economic objectives into corporate decision-making to create long-term value for both the firm and society [28]. As emphasized by [41], sustainability strategy is particularly influenced by environmental considerations, which can simultaneously enhance corporate sustainability and economic performance.

Similarly, ESG performance has emerged as an increasingly important criterion for evaluating firms’ sustainability achievements and determining eligibility for Sustainability awards [2,42]. ESG performance provides a comprehensive assessment of a firm’s environmental, social, and governance practices [17]. Environmental performance reflects efforts to reduce resource consumption and environmental emissions; social performance captures firms’ commitment to employees, human rights, product responsibility, and community engagement; whereas governance performance reflects the effectiveness of corporate governance structures, including directors’ responsibilities and accountability [24,25,26,27,28]. Together, sustainability strategy and ESG performance represent substantive manifestations of firms’ sustainability commitment that may complement or substitute for formal governance mechanisms in securing CSR recognition.

The relationships among CSR committees, sustainability awards, sustainability strategy, and ESG performance can be understood through the complementary perspectives of stakeholder theory, legitimacy theory, signaling theory, and agency theory. Together, these theoretical perspectives explain not only why firms establish CSR committees to strengthen sustainability governance but also why the effectiveness of these committees in obtaining Sustainability awards may depend on firms’ sustainability strategy and ESG performance.

Stakeholder theory posits that firms are accountable to a broad range of stakeholders whose interests extend beyond shareholder wealth maximization [30,43]. Accordingly, organizations are expected to create value for both internal and external stakeholders by addressing environmental, social, and governance concerns and by integrating sustainability into their strategic decision-making processes [44]. Within this framework, CSR committees represent an important governance mechanism that enables boards of directors to oversee sustainability-related activities, coordinate CSR initiatives, and ensure that corporate policies reflect stakeholder expectations [20,45]. Through enhanced oversight and accountability, CSR committees can improve the credibility and consistency of firms’ sustainability efforts, thereby increasing stakeholders’ confidence in corporate sustainability commitments.

From the same perspective, Sustainability awards constitute an external validation of firms’ ability to satisfy stakeholder expectations. Rather than merely recognizing isolated CSR activities, awarding bodies evaluate whether firms have demonstrated meaningful and sustained commitments to responsible business practices [46]. Consequently, Sustainability awards strengthen stakeholder trust, reinforce corporate legitimacy, and enhance firms’ competitive positioning [47]. Likewise, firms that adopt comprehensive sustainability strategies are expected to integrate CSR objectives into their long-term business operations, making their sustainability initiatives more visible and credible to external evaluators [1,39]. Further argues that Sustainability awards function as an important screening mechanism through which customers and other stakeholders distinguish firms demonstrating superior environmental and social performance. Therefore, stakeholder theory suggests that CSR committees are more likely to contribute to CSR recognition when they support substantive sustainability practices that address stakeholder expectations rather than merely satisfying formal governance requirements.

Legitimacy theory provides a complementary explanation by emphasizing firms’ need to obtain and maintain social acceptance. Organizations continuously seek legitimacy by demonstrating that their operations are consistent with prevailing societal values and expectations. Within this context, CSR committees contribute to organizational legitimacy by institutionalizing sustainability governance and embedding social and environmental considerations into board-level decision-making. Likewise, Sustainability awards provide visible external endorsements that publicly validate firms’ sustainability achievements and reinforce their legitimacy among investors, customers, regulators, and society. However, legitimacy is derived not only from governance structures but also from observable sustainability outcomes. Consequently, firms that demonstrate strong sustainability strategies and superior ESG performance are more likely to achieve legitimacy independently of whether formal CSR committees exist.

Signaling theory further explains how CSR committees and Sustainability awards influence stakeholder perceptions under conditions of information asymmetry. Because external stakeholders cannot directly observe firms’ true commitment to sustainability, organizations rely on observable governance mechanisms and sustainability outcomes to communicate their commitment [11,29]. The establishment of a CSR committee therefore signals that sustainability has become a strategic priority within the firm’s governance structure. Similarly, Sustainability awards signal superior CSR and ESG performance, enhancing corporate reputation and stakeholder confidence [48,49]. However, signaling theory also recognizes that governance structures may sometimes function symbolically rather than substantively. Firms may establish CSR committees primarily to project an image of sustainability leadership without implementing meaningful CSR initiatives, resulting in CSR decoupling [22,23]. In such circumstances, organizations may become “badge collectors,” emphasizing external recognition while undertaking limited strategic sustainability actions [50]. This symbolic use of governance mechanisms may mislead stakeholders [1]. Empirical evidence supporting this concern includes [22], who reported that environmental governance mechanisms did not necessarily improve environmental performance; [51], who found no association between environmental committees and greenhouse gas disclosures in Australia, and [52], who documented greater CSR disclosure among firms operating in controversial industries as a means of enhancing corporate image. Consequently, signaling theory suggests that awarding bodies are likely to attach greater importance to observable sustainability achievements than to governance structures alone, implying that the value of CSR committees as a signal may diminish when firms already exhibit strong sustainability strategy and ESG performance [11,53,54].

Agency theory provides an additional governance perspective by arguing that boards adopt monitoring mechanisms to align managerial actions with shareholders’ and stakeholders’ interests while reducing managerial opportunism [10,55]. CSR committees strengthen board oversight of sustainability activities and help ensure that managers implement CSR initiatives that reflect organizational objectives rather than personal interests. Effective governance also reduces the likelihood of CSR decoupling by enhancing accountability and monitoring the implementation of sustainability policies [56,57]. Such oversight is particularly important because managers may strategically employ CSR disclosures to conceal opportunistic behaviour [58]. Consequently, CSR committees contribute to stronger governance by aligning managerial decisions with stakeholder expectations and enhancing the credibility of sustainability initiatives [20]. Nevertheless, agency theory also implies that governance mechanisms create value only when they translate into substantive organizational outcomes. Therefore, the effectiveness of CSR committees in securing Sustainability awards is expected to depend on whether firms implement credible sustainability strategies and achieve superior ESG performance.

Taken together, these theoretical perspectives suggest that CSR committees provide an important governance mechanism capable of enhancing firms’ prospects of receiving Sustainability awards. However, they also indicate that governance structures are unlikely to operate in isolation. Rather, the effectiveness of CSR committees depends on the extent to which they are supported by substantive sustainability strategies and reflected in superior ESG performance. This integrated theoretical perspective provides the foundation for the moderation hypotheses developed in the following sections.

2.2. The Relationship Between Sustainability Committee and Sustainability Awards

CSR committees comprise board members with dedicated advisory and oversight responsibilities for corporate social responsibility and sustainability matters [17]. Unlike sustainability initiatives that depend primarily on the personal commitment of chief executive officers or board chairs, CSR committees institutionalize sustainability governance by embedding responsibility for environmental and social issues within the board structure [49]. As a board-level governance mechanism, CSR committees facilitate strategic planning, monitor sustainability performance, oversee the implementation of sustainability policies, and advise directors on sustainability-related risks and opportunities [59,60]. Consequently, they strengthen corporate decision-making by ensuring that sustainability considerations are systematically incorporated into organizational planning, resource allocation, and long-term business strategy [21]. Although establishing CSR committees is largely voluntary [13], firms often create these committees to position sustainability as an integral component of corporate governance and long-term value creation [13,21].

From a stakeholder perspective, CSR committees enhance firms’ ability to identify, coordinate, and respond to the sustainability expectations of diverse stakeholder groups. Through continuous oversight and monitoring, these committees improve the consistency and credibility of sustainability initiatives, thereby strengthening organizational legitimacy and stakeholder confidence. Similarly, signaling theory suggests that the establishment of a CSR committee communicates a firm’s strategic commitment to responsible business practices, reducing information asymmetry regarding the quality of its sustainability governance. Consequently, external stakeholders and CSR awarding bodies may perceive firms with dedicated CSR committees as more committed to sustainability than firms without such governance structures.

Empirical evidence generally supports this theoretical expectation. Previous studies have consistently reported that CSR committees improve firms’ environmental, social, and governance reporting and performance [10,21,61,62,63,64]. The establishment of CSR committees represents a formal recognition of sustainability issues at the highest level of corporate governance. It reflects boards’ commitment to integrating CSR considerations into strategic decision-making and reporting processes [22,65]. Supporting this view, Reference [45] document that environmental committees improve greenhouse gas disclosure quality, while [13] find that CSR committees are associated with superior environmental and social performance. Likewise, Reference [66] reports that firms with CSR committees exhibit higher CSR performance and strategy scores while experiencing fewer CSR controversies. Reference [15] further show that sustainability committees enhance integrated reporting strategy and disclosure in Malaysian firms. Using Australian data, Reference [11] demonstrate that sustainability committee effectiveness improves environmental performance. In contrast, Reference [67] find that firms with CSR committees provide more comprehensive Sustainable Development Goal (SDG) disclosures.

These findings suggest that CSR committees strengthen both the quality and visibility of firms’ sustainability initiatives, thereby increasing the credibility of corporate sustainability governance [68]. Because Sustainability awards are granted following independent assessments of firms’ environmental and social achievements [1,29], awarding bodies are likely to view the presence of a CSR committee as evidence of structured sustainability oversight and long-term organizational commitment rather than ad hoc CSR activities [40]. Similarly, they argue that firms receiving Sustainability awards typically demonstrate active sustainability leadership at both executive and board levels. Consequently, board-level CSR committees are expected to increase the likelihood that firms receive Sustainability awards by strengthening the governance, credibility, and visibility of corporate sustainability initiatives. Accordingly, the following hypothesis is proposed:

H1: 

Corporate CSR committees are positively associated with firms’ likelihood of receiving sustainability awards.

2.3. The Moderating Role of Corporate Sustainability Strategy

CSR awarding bodies typically evaluate firms using comprehensive assessment criteria that extend beyond the existence of governance structures to include the quality, implementation, and strategic integration of sustainability initiatives. Such evaluations commonly consider firms’ environmental stewardship, community engagement, employee welfare, philanthropic activities, and the extent to which sustainability is embedded within corporate strategy [29]. Similarly, Reference [69] demonstrate that CSR awarding bodies in Malaysia explicitly evaluate both CSR strategy and CSR activities when selecting award recipients. These observations suggest that sustainability recognition depends not only on whether firms establish governance mechanisms but also on how effectively sustainability is incorporated into corporate decision-making and organizational practices.

A corporate sustainability strategy refers to the systematic integration of environmental, social, and governance (ESG) considerations into a firm’s long-term strategic objectives, business operations, and decision-making processes. Rather than treating sustainability as a stand-alone corporate responsibility initiative, firms with well-developed sustainability strategies embed sustainability principles into their competitive positioning, risk management, innovation, stakeholder engagement, and value creation activities. Sustainability strategies generally vary in their level of integration, ranging from compliance-oriented approaches that focus on meeting regulatory requirements, to efficiency-oriented strategies emphasizing resource optimization, and proactive strategies that position sustainability as a source of competitive advantage and long-term value creation. To communicate these strategic commitments, firms typically disclose sustainability objectives, policies, and performance through annual reports, stand-alone sustainability or ESG reports, integrated reports, corporate governance reports, and other publicly available corporate disclosures. These documents provide stakeholders with evidence of a firm’s long-term sustainability commitments and the mechanisms through which sustainability objectives are translated into organizational practices.

Corporate sustainability strategy provides the organizational framework through which CSR committees can translate governance intentions into substantive sustainability outcomes. Previous studies argue that CSR committees facilitate the formulation, implementation, and continuous improvement of sustainability strategies by encouraging directors to integrate environmental and social considerations into corporate decision-making [13,36,67,70,71]. By institutionalizing sustainability within board-level governance, CSR committees help embed ethical considerations into day-to-day managerial decisions [70,71], promote the integration of the Sustainable Development Goals into strategic planning [67], and strengthen firms’ long-term sustainability orientation. Supporting this argument, Reference [20] report that CSR committees encourage boards to adopt formal CSR strategies, while Reference [72] show that CSR committees are particularly valuable in firms pursuing sustainability-oriented business practices. Reference [73] likewise argues that strategically planned CSR initiatives led by organizational sustainability champions increase firms’ ability to achieve meaningful sustainability recognition.

However, the effectiveness of CSR committees in obtaining Sustainability awards is unlikely to be uniform across firms with different levels of sustainability strategy. From a stakeholder perspective, sustainability strategy reflects the extent to which firms systematically respond to stakeholder expectations by embedding sustainability objectives into their long-term operations. When sustainability strategy is weak or only moderately developed, CSR committees provide essential governance structures that coordinate sustainability initiatives, establish accountability, and enhance the visibility of firms’ sustainability efforts. Under these circumstances, CSR committees play a critical role in translating fragmented sustainability activities into coherent governance practices that are more likely to be recognized by awarding bodies.

Conversely, when firms have highly developed sustainability strategies, sustainability principles are already integrated into organizational decision-making, resource allocation, and business operations. In such firms, sustainability performance is driven primarily by strategic integration rather than by the existence of a specific governance committee. Consequently, awarding bodies are more likely to evaluate the substantive outcomes generated by the sustainability strategy itself than the governance structures supporting it. From a signaling perspective, a comprehensive sustainability strategy provides a stronger and more credible signal of organizational commitment than the mere existence of a CSR committee because it reflects observable, organization-wide implementation rather than formal governance arrangements. As a result, the incremental signaling value of CSR committees is expected to decline as sustainability strategy becomes more comprehensive.

Therefore, sustainability strategy is expected to shape the extent to which CSR committees contribute to firms’ likelihood of receiving Sustainability awards. Specifically, CSR committees should exert a stronger influence in firms where sustainability strategy is relatively underdeveloped because governance structures compensate for weaker strategic integration. In contrast, their incremental contribution is expected to diminish in firms with highly developed sustainability strategies, where sustainability recognition is driven primarily by substantive strategic implementation rather than governance mechanisms alone. Accordingly, the second hypothesis is proposed as follows:

H2: 

The relationship between corporate CSR committees and sustainability awards is moderated by the firm’s sustainability strategy.

2.4. The Moderating Role of Corporate ESG Performance

ESG performance has become an increasingly important indicator of corporate sustainability. It has attracted considerable attention from academics, practitioners, investors, and regulators because of its implications for corporate value, reputation, and long-term performance [11,53,54,73]. Consequently, firms have increasingly integrated ESG considerations into their business operations to strengthen stakeholder relationships, enhance organizational legitimacy, and improve market credibility [74]. As ESG performance provides observable evidence of firms’ sustainability achievements, it is expected to influence the effectiveness of governance mechanisms in securing external sustainability recognition.

Sustainability awarding bodies increasingly rely on objective indicators of sustainability performance when evaluating award candidates. Among these indicators, ESG performance represents one of the most comprehensive assessments of firms’ environmental stewardship, social responsibility, and governance quality [1,2,42]. Consequently, firms with superior ESG performance are generally more likely to receive Sustainability awards because they demonstrate measurable sustainability outcomes that extend beyond symbolic commitments. Supporting the importance of governance in achieving sustainability outcomes, Reference [75] report that CSR-linked executive compensation strengthens the relationship between CSR committees and CSR performance, while [76] show that firms become more publicly engaged in CSR activities following the receipt of prestigious Sustainability awards.

However, ESG performance may also alter the extent to which CSR committees contribute to firms’ likelihood of receiving Sustainability awards. From a stakeholder perspective, stakeholders ultimately evaluate firms based on observable sustainability outcomes rather than governance structures alone. Although CSR committees strengthen sustainability oversight and coordination, they represent governance inputs rather than sustainability outputs. In contrast, ESG performance reflects the tangible environmental, social, and governance achievements that stakeholders and awarding bodies can directly observe and evaluate. Consequently, when firms demonstrate strong ESG performance, awarding bodies may attribute sustainability excellence primarily to the firm’s demonstrated achievements rather than to the governance mechanisms supporting those achievements.

Signaling theory provides a complementary explanation. Under conditions of information asymmetry, firms use governance structures such as CSR committees to signal their commitment to sustainability. However, the credibility of a signal depends on the availability of more direct and observable information. ESG performance constitutes a stronger and more credible signal because it reflects realized sustainability outcomes rather than intentions or governance arrangements. Accordingly, as ESG performance improves, the signaling value of CSR committees is expected to diminish because stakeholders can directly evaluate firms’ sustainability achievements without relying on governance structures as indirect indicators of commitment.

This reasoning is also consistent with the mixed evidence regarding the effectiveness of CSR committees. Although CSR committees have been associated with improved sustainability governance, previous studies suggest that awarding bodies increasingly emphasize substantive sustainability activities rather than organizational structures alone [49]. Likewise, award evaluation criteria frequently prioritize stakeholder-oriented and publicly visible CSR achievements [40], allowing firms without formal CSR committees but with superior ESG performance to achieve sustainability recognition. Therefore, the incremental contribution of CSR committees is expected to be greater among firms with relatively low or moderate ESG performance, where governance structures provide valuable signals of sustainability commitment. Conversely, as ESG performance becomes stronger, CSR committees are expected to play a less influential role because external recognition is increasingly driven by demonstrated sustainability performance rather than governance mechanisms.

Accordingly, ESG performance is expected to moderate the relationship between CSR committees and Sustainability awards.

H3: 

The relationship between corporate CSR committees and sustainability awards is moderated by corporate ESG performance.

3. Research Methodology

3.1. Variables

The sustainability award (hereafter, ST_AWARD) recognizes organizations that demonstrate outstanding commitment to ethical business practices, social responsibility, and environmental sustainability [42]. Following prior studies (e.g., [65,77]), CSR_AWARD is measured as a binary variable that equals 1 if firm i received at least one CSR or sustainability-related award in year t, and 0 otherwise. The award information was obtained from the Bloomberg ESG database, which compiles data on firms’ receipt of CSR and sustainability awards from publicly available and verified sources, including corporate disclosures, annual and sustainability reports, stock exchange announcements, and recognized awarding organizations. Bloomberg identifies whether a firm has received a CSR or sustainability-related award during a given fiscal year, and this information is used to construct the binary indicator employed in this study.

The sustainability committee or environmental team (ST_Com) is measured as a binary variable that equals 1 if a firm has either a sustainability committee or a sustainability management team, and 0 otherwise. Sustainability committees are responsible for overseeing corporate social and environmental performance and integrating sustainability considerations into corporate governance [14]. Similarly, environmental teams are tasked with developing, evaluating, and implementing firms’ environmental policies, plans, and sustainability-related initiatives [17].

The study employs two moderating variables: the sustainability strategy score (ST_STRAT) and the environmental, social, and governance performance score (ESG). The ST_STRAT is obtained from Bloomberg and reflects the extent to which a firm has developed and implemented a comprehensive sustainability or CSR strategy. The ESG is also sourced from Bloomberg and provides a composite assessment of a firm’s sustainability performance based on 120 indicators across three dimensions. The environmental dimension evaluates practices related to energy consumption, waste management, pollution control, natural resource conservation, and biodiversity. The social dimension captures performance in areas such as stakeholder relations, corporate philanthropy, employee health and safety, human capital management, and community engagement. The governance dimension assesses the quality of corporate governance through indicators including board structure, executive compensation, diversity, shareholder rights, and conflict-of-interest policies.

To improve the robustness of the empirical analysis, we control for firm size, financial leverage, and investment opportunities. Firm size (FIRMSIZE) is measured as the natural logarithm of a firm’s market capitalization at the end of fiscal year t. Financial leverage (LEVERAGE) is calculated as the ratio of total debt to total assets. Investment opportunities (INVESTMENT) are measured as the natural logarithm of a firm’s capital expenditures at the end of fiscal year t. Firm profitability (PROFITABILITY) is measured using the return on assets (ROA) ratio, calculated as net income divided by total assets. Board Size (SIZEBOARD) is measured as the total number of directors serving on the board of directors at the end of the fiscal year. Board Independence (INDEPENDENCE) is measured as the percentage of independent non-executive directors on the board of directors at the end of the fiscal year. These control variables have been widely employed in prior corporate governance and sustainability studies to account for firm-specific characteristics that may influence the likelihood of receiving sustainability awards. Definitions of variables are shown in Table 1.

Table 1. Definition and measurement of the study variables.

Variable	Acronym	Operationalizations
Dependent Variable
Sustainability or CSR award	ST_Award	A dummy indicator equal to 1 if firm i received a CSR or sustainability award in year t, and 0 otherwise.
Independent variables
The sustainability committee	ST_Com	A dummy variable assigned a value of 1 for firms with a dedicated sustainability committee or sustainability management team, and 0 for firms without either governance mechanism.
Moderating variables
The sustainability strategy	ST_STRAT	A continuous measure based on Bloomberg’s corporate sustainability strategy score, ranging from 0 to 100, with higher scores indicating stronger strategic commitment to sustainability.
The environmental, social, and governance performance score	ESG	A Bloomberg ESG score that evaluates the environmental, social, and governance performance of firm i in year t. The score ranges from 0 (lowest) to 100 (highest), with higher scores reflecting stronger ESG performance.
Control Variables
Corporate size	FIRMSIZE	A continuous measure calculated as the natural logarithm of the market capitalization of firm i at the end of year t.
Corporate leverage	LEVERAGE	A continuous measure of financial leverage computed by dividing the total debt of firm i by its total assets in year t.
Corporate investment opportunities	INVESTMENT	A continuous measure computed as the natural logarithm of corporate capital expenditure for firm i at the end of the fiscal year.
Corporate profitability	PROFITABILITY	The return on assets (ROA) ratio, calculated as net income divided by total assets.
Corporate board size	SIZEBOARD	The total number of directors serving on the board of directors at the end of the fiscal year.
Corporate board independence	INDEPENDENCE	The percentage of independent non-executive directors on the board of directors at the end of the fiscal year.

3.2. Logit Regression Models

We employ Logit regression because the dependent variable (ST_Award) is dichotomous, rendering Ordinary Least Squares (OLS) estimation inappropriate due to its assumption of a continuous dependent variable. The Logit model estimates the probability of receiving a sustainability award using the logistic cumulative distribution function, thereby ensuring that predicted probabilities remain bounded between zero and one. Moreover, the estimated coefficients can be interpreted through odds ratios, facilitating the assessment of how changes in the explanatory variables affect the likelihood of receiving a sustainability award. Compared with OLS, the Logit model provides more efficient and consistent estimates for binary outcomes, avoids implausible probability predictions outside the ([0, 1]) interval, and appropriately captures the nonlinear relationship between the explanatory variables and the dependent variable. Although both Logit and Probit models are suitable for binary-response analysis and generally produce comparable results, the Logit specification is adopted as the primary estimation technique because of its computational simplicity and ease of interpretation. To further ensure the robustness of our findings, the analyses are subsequently re-estimated using the Probit model.

To provide a rigorous assessment of the proposed hypotheses, we estimate a sequence of regression models in which the explanatory variables are introduced progressively. This modelling strategy enables us to isolate the direct effect of the sustainability committee and subsequently examine the moderating roles of sustainability strategy and ESG performance while evaluating the incremental explanatory power of each specification.

To test H1, which predicts that firms with sustainability committees are more likely to receive sustainability awards, we estimate the following baseline Logit model in which ST_Award is regressed on ST_Com together with the control variables. The empirical specification is presented in Equation (1).

$$\begin{array}{ll}{\left[\mathit{ST\_Award}\right]}_{i,t}=& {\beta }_0+{\beta }_1{\left[\mathit{ST\_} \mathit{Com}\right]}_{i,t}+{\beta }_2{\left[FIRMSIZE\right]}_{i,t}+{\beta }_3{\left[LEVERAGE\right]}_{i,t}+{\beta }_4{\left[INVESTMENT\right]}_{i,t}\\ & +{\beta }_5{\left[PRFITABILITY\right]}_{i,t}+{\beta }_6{\left[BOARDSIZE\right]}_{i,t}+{\beta }_7{\left[INDEPENDENCE\right]}_{i,t}+\sum Years\\ & +\sum Industries+\sum Countries+{\epsilon }_{i,t}\end{array}$$

(1)

To test H2, which proposes that corporate sustainability strategy moderates the relationship between sustainability committees and the likelihood of receiving sustainability awards, we extend the baseline model by incorporating ST_STRAT as the moderating variable. To capture the conditional effect of sustainability strategy, we include an interaction term between the sustainability committee variable and the sustainability strategy score (ST_Com × ST_STRAT). The significance and direction of the interaction coefficient indicate whether the effect of sustainability committees on firms’ likelihood of receiving sustainability awards varies across different levels of strategic sustainability integration. The empirical specification used to test this hypothesis is presented in Equation (2).

$$\begin{array}{ll}{\left[\mathit{ST\_Award}\right]}_{i,t}=& {\beta }_0+{\beta }_1{\left[\mathit{ST\_} \mathit{Com}\right]}_{i,t}+{\beta }_2{\left[\mathit{ST\_STRAT}\right]}_{i,t}+{\beta }_3{\left[\mathit{ST\_} \mathit{Com} X \mathit{ST\_STRAT}\right]}_{i,t}+{\beta }_4{\left[FIRMSIZE\right]}_{i,t}\\ & +{\beta }_5{\left[LEVERAGE\right]}_{i,t}+{\beta }_6{\left[INVESTMENT\right]}_{i,t}+{\beta }_7{\left[PRFITABILITY\right]}_{i,t}+{\beta }_8{\left[BOARDSIZE\right]}_{i,t}\\ & +{\beta }_9{\left[INDEPENDENCE\right]}_{i,t}+\sum Years+\sum Industries+\sum Countries+{\epsilon }_{i,t}\end{array}$$

(2)

To test H3, which posits that ESG performance moderates the relationship between sustainability committees and firms’ likelihood of receiving sustainability awards, we further extend the baseline model by incorporating ESG as the moderating variable. To capture the conditional effect of ESG performance, an interaction term between the sustainability committee variable and ESG performance (ST_Com × ESG) is included in the regression model. The coefficient on this interaction term indicates whether the influence of sustainability committees on the probability of receiving a sustainability award varies across different levels of ESG performance. The empirical specification employed to test this hypothesis is presented in Equation (3).

$$\begin{array}{ll}{\left[\mathit{ST\_Award}\right]}_{i,t}=& {\beta }_0+{\beta }_1{\left[\mathit{ST\_} \mathit{Com}\right]}_{i,t}+{\beta }_2{\left[ESG\right]}_{i,t}+{\beta }_3{\left[\mathit{ST\_} \mathit{Com} X ESG\right]}_{i,t}+{\beta }_4{\left[FIRMSIZE\right]}_{i,t}\\ & +{\beta }_5{\left[LEVERAGE\right]}_{i,t}+{\beta }_6{\left[INVESTMENT\right]}_{i,t}+{\beta }_7{\left[PRFITABILITY\right]}_{i,t}+{\beta }_8{\left[BOARDSIZE\right]}_{i,t}\\ & +{\beta }_9{\left[INDEPENDENCE\right]}_{i,t}+\sum Years+\sum Industries+\sum Countries+{\epsilon }_{i,t}\end{array}$$

(3)

Finally, we estimate Model [4], which incorporates all explanatory variables to provide a comprehensive assessment of the proposed relationships. Specifically, the model includes the main effect of the sustainability committee (ST_Com), the moderating variables (ST_STRAT and ESG), their corresponding interaction terms (ST_Com × ST_STRAT and ST_Com × ESG), and the full set of control variables. Estimating this fully specified model enables us to simultaneously examine the direct and moderating effects while controlling for firm-specific characteristics. Consequently, Model [4] provides a comprehensive evaluation of the interplay among sustainability committees, sustainability awards, sustainability strategy, and ESG performance, thereby enhancing the robustness and reliability of the empirical findings.

$$\begin{array}{ll}{\left[\mathit{ST\_Award}\right]}_{i,t}=& {\beta }_0+{\beta }_1{\left[\mathit{ST\_} \mathit{Com}\right]}_{i,t}+{\beta }_2{\left[\mathit{ST\_STRAT}\right]}_{i,t}+{\beta }_3{\left[\mathit{ST\_} \mathit{Com} X \mathit{ST\_STRAT}\right]}_{i,t}+{\beta }_4{\left[ESG\right]}_{i,t}\\ & +{\beta }_5{\left[\mathit{ST\_} \mathit{Com} X ESG\right]}_{i,t}+{\beta }_6{\left[FIRMSIZE\right]}_{i,t}+{\beta }_7{\left[LEVERAGE\right]}_{i,t}+{\beta }_8{\left[INVESTMENT\right]}_{i,t}\\ & +{\beta }_9{\left[PRFITABILITY\right]}_{i,t}+{\beta }_{10}{\left[BOARDSIZE\right]}_{i,t}+{\beta }_{11}{\left[INDEPENDENCE\right]}_{i,t}+\sum Yearies\\ & +\sum Industries+\sum Countries+{\epsilon }_{i,t}\end{array}$$

(4)

To account for potential serial correlation and unobserved firm-specific heterogeneity, we estimate firm-clustered robust standard errors, following [24,28]. To reduce the influence of extreme observations and mitigate the potential effects of outliers, all continuous variables are winsorized at the 5th and 95th percentiles. Furthermore, to assess the presence of multicollinearity, we calculate the Variance Inflation Factor (VIF) for all explanatory variables. The results indicate that all VIF values are well below the commonly accepted threshold of 10, suggesting that multicollinearity is not a concern and is unlikely to bias the estimated regression coefficients (All empirical analyses were conducted using Stata 17 (StataCorp LLC, College Station, TX, USA). The software was used for data management, descriptive statistics, correlation analysis, regression estimation, instrumental variable analysis, and robustness tests reported in this study.).

3.3. Sample

This study employs an international panel dataset comprising 34,160 firm-year observations from 3416 unique non-financial firms listed in the Bloomberg database over the period 2010–2019, which precedes the COVID-19 pandemic and, therefore, avoids the distortions introduced by the unprecedented economic and operational disruptions associated with the pandemic. The sample covers firms from 23 countries and 10 major industries, providing a broad cross-country and cross-industry representation of corporate sustainability practices, governance structures, and external sustainability recognition.

Financial institutions are excluded from the sample because they operate under unique regulatory frameworks, capital requirements, governance structures, and disclosure obligations that differ substantially from those of non-financial firms. Moreover, their sustainability reporting and risk management practices are strongly influenced by industry-specific regulations, which may limit the comparability of empirical results across sectors. Excluding these firms is consistent with prior corporate governance and sustainability research and enhances the homogeneity of the sample.

The use of Bloomberg as the primary data source offers several advantages. Bloomberg provides standardized and internationally comparable information on corporate governance, sustainability strategy, ESG performance, and sustainability awards, thereby facilitating consistent measurement of the study variables across different institutional settings. The large and geographically diverse sample also enables the findings to capture variations in governance practices and sustainability engagement across countries with different legal, economic, and institutional environments.

The breadth of the sample, together with its international and multi-industry coverage, enhances the external validity and generalizability of the empirical findings. The dataset provides a robust basis for examining the relationship between sustainability committees and sustainability awards, while also assessing the moderating roles of corporate sustainability strategy and ESG performance across diverse institutional contexts.

4. Descriptive and Correlation Analysis

Table 2 presents the descriptive statistics of the variables used in the empirical analysis. The results indicate that, on average, 19.13% of the sampled firm-year observations received a sustainability award (ST_Award), suggesting that a relatively limited proportion of firms achieves external sustainability recognition. Similarly, 27.41% of the firms have an established sustainability committee or environmental management team (ST_Com), indicating that formal sustainability governance structures are adopted by approximately one-quarter of the sampled firms.

Table 2. Descriptive statistics of the variables used in the empirical analysis.

	Mean	Std. Dev.	Median	Min.	Max.
ST_Award	0.1913	0.3927	0.0000	0.0000	1.0000
ST_Com	0.2741	0.4469	0.0000	0.0000	1.0000
ST_STRAT	52.176	26.9615	44.1826	0.0513	99.9800
ESG	53.283	18.0414	52.6893	7.2904	97.6617
FIRMSIZE	21.4192	1.8839	21.4713	5.6786	27.3481
LEVERAGE	91.6215	14,246	0.2412	0.0000	26,206
INVESTMENT	19.4300	2.6200	19.6900	6.6000	26.2800
PROFITABILITY	0.0548	0.0896	0.0473	−0.3864	0.4217
BOARDSIZE	10.2847	2.6318	10.0000	3.0000	22.0000
INDEPENDENCE	48.4185	22.3471	56.6700	0.0000	78.0000

Regarding sustainability-related characteristics, the average sustainability strategy score (ST_STRAT) is 52.18, with values ranging from 0.05 to 99.98, demonstrating substantial variation in the extent to which firms integrate sustainability into their strategic planning. Likewise, the mean ESG score is 53.28, ranging from 7.29 to 97.66, indicating considerable heterogeneity in firms’ environmental, social, and governance performance. Collectively, these statistics suggest that the sampled firms exhibit moderate levels of sustainability strategy and ESG performance, although significant cross-sectional differences exist.

With respect to the control variables, the average firm size (FIRMSIZE), measured as the natural logarithm of market capitalization, is 21.42, with a standard deviation of 1.88, indicating moderate variation in firm size across the sample. Firm leverage (LEVERAGE) has a median of 0.24. However, it exhibits substantial dispersion, as reflected by its relatively large standard deviation, suggesting the presence of firms with exceptionally high debt levels despite the winsorization procedure. The mean value of INVESTMENT, measured as the natural logarithm of capital expenditure, is 19.43, indicating notable variation in firms’ investment activities.

The average profitability (PROFITABILITY), measured by the return on assets (ROA), is 5.48%, with a median of 4.73%, suggesting that the sampled firms are, on average, profitable. However, profitability varies considerably across firms, as evidenced by ROA values ranging from −38.64% to 42.17%. The average board size (BOARDSIZE) is 10.28 directors, with board sizes ranging from 3 to 22 members, indicating considerable variation in board composition across firms. Finally, the mean board independence (INDEPENDENCE) is 48.42%, implying that, on average, nearly half of board members are independent directors. However, the proportion varies substantially across firms, reflecting differences in corporate governance structures.

Table 3 presents the Pearson correlation matrix for the dependent, independent, moderating, and control variables included in the empirical analysis. Overall, the correlation coefficients provide preliminary evidence regarding the associations among the study variables. The results reveal a positive and statistically significant correlation between ST_Award and ST_Com (r = 0.3232, p < 0.01), suggesting that firms with a sustainability committee or environmental management team are more likely to receive sustainability awards. Similarly, ST_Award is positively correlated with ST_STRAT (r = 0.3820, p < 0.01) and ESG (r = 0.3402, p < 0.01), indicating that firms with more developed sustainability strategies and stronger ESG performance are more likely to obtain external sustainability recognition.

Table 3. Pearson correlation matrix and multicollinearity assessment of the study variables.

	1	2	3	4	5	6	7	8	9	10
1 ST_Award	1.000
2 ST_Com	0.3232 **	1.000
3 ST_STRAT	0.3820 **	0.4035 **	1.000
4 ESG	0.3402 **	0.3273 **	0.3819 **	1.000
5 FIRMSIZE	0.3109 **	0.2775 **	0.2348 **	0.3331 **	1.000
6 LEVERAGE	−0.0389 **	−0.0430 **	−0.0417 *	−0.0631 **	−0.0982 **	1.000
7 INVESTMENT	0.0239 **	0.0807 **	0.1214 **	0.0131 *	−0.1066 **	0.1763 **	1.000
8 PROFITABILITY	0.1468 **	0.1194 **	0.1852 **	0.2217 **	0.0948 ***	−0.2143 **	0.1386 ***	1.000
9 BOARDSIZE	0.1763 **	0.2149 **	0.1726 **	0.1845 **	0.4368 **	−0.0428 **	0.0825 **	0.0639 **	1.000
10 INDEPENDENCE	0.1535 **	0.1917 **	0.2046 **	0.2471 **	0.2819 **	−0.0612 **	0.0278 **	0.1163 **	0.2684 **	1.000

***, **, and * represents significance at 1%, 5%, and 10% levels, respectively.

The control variables exhibit generally consistent relationships with the main variables. FIRMSIZE is positively associated with ST_Award, ST_Com, ST_STRAT, and ESG, suggesting that larger firms tend to adopt more developed sustainability governance structures and exhibit stronger sustainability performance. In contrast, LEVERAGE displays weak but statistically significant negative correlations with the principal variables, implying that firms with higher debt levels are generally less engaged in sustainability-related governance and performance. INVESTMENT is positively correlated with ST_Com and ST_STRAT, although its association with ESG is relatively weak, indicating that capital investment alone does not necessarily translate into stronger ESG performance. PROFITABILITY is positively and significantly correlated with ST_Award (r = 0.1468, p < 0.01), ST_Com (r = 0.1194, p < 0.01), ST_STRAT (r = 0.1852, p < 0.01), and ESG (r = 0.2217, p < 0.01), suggesting that more profitable firms are more likely to invest in sustainability initiatives and receive external sustainability recognition. Likewise, BOARDSIZE exhibits positive and significant correlations with the sustainability variables, particularly FIRMSIZE (r = 0.4368, p < 0.01), indicating that larger firms tend to maintain larger boards and more formal sustainability governance structures. INDEPENDENCE is also positively associated with ST_Award, ST_Com, ST_STRAT, and ESG, implying that boards with a higher proportion of independent directors are generally linked to stronger sustainability governance and performance.

The Pearson correlation matrix also provides an initial assessment of potential multicollinearity among the explanatory variables. As suggested by Reference [17], correlation coefficients exceeding 0.80 may indicate serious multicollinearity concerns. As reported in Table 3, all pairwise correlations are substantially below this threshold, with the highest correlation being 0.4368 between FIRMSIZE and BOARDSIZE. These results indicate that multicollinearity is unlikely to affect the regression estimates. This conclusion is further supported by the Variance Inflation Factor (VIF) analysis, where all VIF values are well below the conventional threshold of 10, confirming that multicollinearity does not pose a significant concern in the empirical analysis.

5. Empirical Results

5.1. Hypotheses Results

Table 4 reports the results of the Logit regression models examining the relationship between sustainability committees and sustainability awards, together with the moderating roles of corporate sustainability strategy and ESG performance. The Wald Chi-square statistics are statistically significant at the 1% level across all model specifications, confirming the overall significance and goodness-of-fit of the estimated models. Moreover, the Pseudo R² increases from 0.354 in Model [1] to 0.456 in Model [4], indicating that the inclusion of sustainability strategy, ESG performance, and their interaction terms enhances the explanatory power of the regression models.

Table 4. Logit regression results on the effect of sustainability committees on sustainability awards and the moderating roles of sustainability strategy and ESG performance.

	[1]	[2]	[3]	[4]
ST_Com	2.2020 *** (7.135)	2.4360 *** (9.034)	1.8060 *** (4.842)	1.5300 *** (3.625)
ST_STRAT		0.2840 *** (1.015)		0.2550 *** (1.102)
ST_Com × ST_STRAT		−0.2040 *** (0.97)		−0.2240 *** (0.919)
ESG			0.3070 *** (1.017)	0.2940 *** (1.046)
ST_Com × ESG			−0.2160 *** (0.948)	−0.2240 *** (0.969)
FIRMSIZE	0.9030 *** (1.935)	0.7560 *** (1.678)	0.5530 *** (1.338)	0.5380 *** (1.325)
LEVERAGE	0.2330 (1.01)	0.2330 (1.030)	0.2320 (1.12)	0.2330 (1.61)
INVESTMENT	0.2160 * (0.938)	0.1760 *** (0.924)	0.2200 (0.969)	0.2040 ** (0.927)
PROFITABILITY	0.9470 *** (3.951)	0.6530 *** (3.619)	0.6350 *** (3.327)	0.4960 *** (3.383)
BOARDSIZE	0.2350 (0.156)	0.2350 (0.619)	0.2360 (0.906)	0.2350 (0.783)
INDEPENDENCE	0.4520 ** (1.887)	0.4920 *** (1.813)	0.4480 ** (1.863)	0.4710 ** (1.824)
Constant	−16.4770 *** (3.16)	−13.9450 *** (3.62)	−11.7230 *** (2.59)	−11.2380 *** (2.19)
Years	Yes	Yes	Yes	Yes
Industries	Yes	Yes	Yes	Yes
Countries	Yes	Yes	Yes	Yes
n	34,160	34,160	34,160	34,160
Pseudo R2	0.354	0.414	0.449	0.456
Wald chi2	7514.1 ***	7843.9 ***	6694.6 ***	6709.2 ***

* p-value < 0.01, ** p < 0.05, *** p > 0.001; values in parentheses are Z-Scores.

Model [1] examines the direct effect of ST_Com on ST_Award. The coefficient on ST_Com is positive and highly significant (β = 2.2020, p < 0.001; odds ratio = 7.15), indicating that firms with a sustainability committee or environmental management team are substantially more likely to receive sustainability awards than firms without such governance structures. Therefore, H1 is supported. This finding suggests that sustainability committees serve as an effective governance mechanism that strengthens board oversight of sustainability initiatives, enhances stakeholder confidence, and signals a firm’s commitment to responsible business practices. The result is consistent with stakeholder theory, which posits that effective governance mechanisms enable firms to better respond to stakeholder expectations [30], and signaling theory, which argues that board-level sustainability structures communicate credible information regarding a firm’s long-term sustainability commitment [31]. The finding also aligns with previous studies showing that sustainability committees improve sustainability performance, reporting quality, and corporate transparency [13,20].

Model [2] introduces ST_STRAT as the moderating variable. The direct effect of ST_STRAT is positive and statistically significant (β = 0.2840, p < 0.001), indicating that firms with stronger sustainability strategies are independently more likely to receive sustainability awards. More importantly, the interaction term between ST_Com and ST_STRAT is negative and statistically significant (β = −0.2040, p < 0.001), suggesting that the positive effect of sustainability committees on sustainability awards weakens as firms develop more comprehensive sustainability strategies. Accordingly, H2 is supported.

This finding indicates that sustainability strategy partially substitutes for the governance role performed by sustainability committees. In firms with relatively weak sustainability strategies, sustainability committees provide the governance structure, strategic coordination, and board oversight necessary to guide sustainability initiatives and enhance external recognition. However, as sustainability becomes more deeply embedded within the firm’s strategic planning and organizational processes, the incremental contribution of a dedicated sustainability committee becomes less pronounced because sustainability objectives are already institutionalized throughout the organization. This finding is consistent with Substitution Theory, which suggests that different governance mechanisms may perform overlapping functions, thereby reducing the marginal contribution of one mechanism when another is already well established. It also supports Institutional Theory, which argues that organizations with mature sustainability strategies integrate sustainability into routine decision-making processes, making formal governance structures less influential in determining external sustainability recognition.

Model [3] examines the moderating role of ESG performance. The coefficient on ESG is positive and highly significant (β = 0.3070, p < 0.001), confirming that firms with stronger ESG performance are more likely to receive sustainability awards. However, the interaction between ST_Com and ESG is negative and statistically significant (β = −0.2160, p < 0.001), indicating that superior ESG performance reduces the incremental effect of sustainability committees on the likelihood of receiving sustainability awards. Therefore, H3 is supported.

This result suggests that observable sustainability outcomes substitute for governance signals. Sustainability committees represent governance inputs that demonstrate a firm’s commitment to sustainability, whereas ESG performance reflects tangible and measurable sustainability outcomes that awarding bodies can directly evaluate. As firms achieve stronger ESG performance, external stakeholders rely less on governance structures as indirect indicators of sustainability commitment because superior ESG performance already provides credible evidence of effective sustainability management. This interpretation is consistent with Signaling Theory, whereby stronger observable signals reduce the informational value of indirect governance signals. The finding is also supported by Resource Dependence Theory, which argues that governance mechanisms are particularly valuable when firms require additional organizational capabilities to manage external stakeholder expectations. Once firms establish superior ESG performance, these capabilities become embedded within the organization, thereby reducing the marginal contribution of sustainability committees in obtaining external sustainability recognition.

Model [4], which incorporates both moderating variables simultaneously, provides the most comprehensive assessment of the proposed relationships. The coefficient on ST_Com remains positive and statistically significant (β = 1.5300, p < 0.001), confirming that sustainability committees continue to exert an independent positive influence on sustainability awards after controlling for sustainability strategy and ESG performance. Nevertheless, both interaction terms remain negative and statistically significant (ST_Com × ST_STRAT: β = −0.2240, p < 0.001; ST_Com × ESG: β = −0.2240, p < 0.001), reaffirming that stronger sustainability strategies and higher ESG performance reduce—but do not eliminate—the incremental contribution of sustainability committees to external sustainability recognition. Collectively, these findings suggest that sustainability committees are particularly valuable for firms whose sustainability practices have not yet become fully institutionalized. As firms mature in their sustainability strategy and ESG performance, substantive sustainability capabilities increasingly substitute for formal governance mechanisms in shaping sustainability awards.

Regarding the control variables, FIRMSIZE is consistently positive and statistically significant across all models, indicating that larger firms are more likely to receive sustainability awards, possibly because they possess greater financial resources, organizational capabilities, and public visibility to implement sustainability initiatives. LEVERAGE remains statistically insignificant throughout the analysis, suggesting that capital structure does not materially influence firms’ likelihood of receiving sustainability awards. INVESTMENT exhibits a generally positive association with sustainability awards and is statistically significant in most specifications, indicating that firms with greater capital investment are also more likely to invest in sustainability initiatives that enhance external recognition. Furthermore, PROFITABILITY is positive and highly significant across all models, suggesting that financially stronger firms possess greater capacity to invest in sustainability initiatives and obtain external recognition. BOARDSIZE remains statistically insignificant, implying that the number of directors alone does not significantly affect sustainability awards. In contrast, INDEPENDENCE exhibits a positive and statistically significant association with sustainability awards, indicating that boards with a higher proportion of independent directors provide more effective oversight of sustainability activities and strengthen firms’ prospects of receiving external sustainability recognition.

5.2. Subsample Analysis Based on Sustainability Strategy and ESG Performance

To provide further insight into the moderating effects identified in the regression analysis, we conduct a subsample analysis by classifying firms into low, medium, and high groups according to their sustainability strategy (ST_STRAT) and ESG performance (ESG) scores. Firms are categorized using percentile rankings, whereby the high group comprises firms with values greater than or equal to the median, the medium group includes firms between the 10th percentile and the median, and the low group consists of firms at or below the 10th percentile. This approach enables us to investigate whether the influence of sustainability committees on sustainability awards varies according to firms’ sustainability maturity. The results are presented in Table 5.

Table 5. Subsample analysis based on corporate sustainability strategy and ESG performance.

	Full Sample	ST_STRAT			ESG
		Low	Mid	High	Low	Mid	High
ST_Com	1.6680 *	1.5480 * (7.08)	1.6690 * (15.97)	0.6010 * (3.95)	−0.6490 (−0.59)	1.0490 * (9.79)	1.0240 * (9.66)
ST_STRAT	0.3930 *	0.3910 (1.37)	−0.3810 (−1.52)	0.3960 * (16.96)
ST_Com × ST_STRAT	−0.3820 *
ESG	0.4320 *				0.4070 (1.32)	0.4450 * (13.69)	0.4390 * (15.86)
ST_Com × ESG	−0.3820 *
FIRMSIZE	0.6760 *	0.5090 * (3.09)	0.4810 * (10.44)	0.5130 * (21.51)	0.5040 (1.42)	0.5530 * (9.20)	0.4890 * (8.80)
LEVERAGE	−0.3730	0.3720 (−0.34)	0.3720 (0.32)	0.3720 (1.61)	0.3720 (−0.07)	0.3720 (1.05)	0.3720 (1.01)
INVESTMENT	−0.4190 **	0.4140 * (2.97)	0.4450 (2.43)	0.4610 (2.60)	0.4630 * (3.35)	0.3880 ** (2.45)	0.4000 * (3.16)
PROFITABILITY	0.8760 *	0.6090 * (3.09)	0.5810 * (10.44)	0.6130 * (21.51)	0.6040 (1.42)	0.6530 * (9.20)	0.5890 * (8.80)
BOARDSIZE	−0.4030	−0.3870 (−0.34)	0.3790 (0.32)	0.3910 (1.61)	0.3840 (0.07)	−0.4630 (−1.05)	0.3830 (1.01)
INDEPENDENCE	0.5020 **	0.5140 * (3.97)	0.4900 ** (3.43)	0.5510 (2.60)	0.5040 * (2.35)	0.5440 ** (3.45)	0.5030 * (2.16)
Constant	−11.8440 *	−3.9490 * (−11.90)	−3.5210 * (−13.34)	−4.2320 * (−29.45)	−6.2820 * (−7.86)	−6.6950 * (−25.77)	−6.4870 * (−31.25)
Year dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Industry dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Country dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes
n	34,160	3428	13,540	17,192	3254	13,851	17,055
Pseudo R2	0.456	0.062	0.071	0.093	0.079	0.086	0.099
Wald chi2	6709.2 ***	100.5 ***	485.2 ***	1213.7 ***	49.2 ***	553.1 ***	701.78 ***

* p-value < 0.01, ** p < 0.05, *** p > 0.001; values in parentheses are z-values.

The subsample analysis based on sustainability strategy provides additional evidence supporting the moderating effect reported in the full-sample regression models. Specifically, the coefficient on ST_Com remains positive and statistically significant across the low, medium, and high sustainability strategy subsamples, although its magnitude declines considerably as sustainability strategy becomes stronger. The coefficient decreases from 1.548 in the low-strategy group to 0.601 in the high-strategy group, indicating that the contribution of sustainability committees to obtaining sustainability awards becomes progressively weaker as firms develop more comprehensive sustainability strategies.

Moreover, ST_STRAT itself is statistically insignificant within the low- and medium-strategy subsamples but becomes positive and highly significant in the high-strategy group. This finding suggests that sustainability strategy becomes an important determinant of sustainability awards only after firms reach relatively advanced levels of strategic sustainability integration. At lower levels of sustainability maturity, awarding bodies appear to rely more heavily on governance mechanisms, such as sustainability committees, as indicators of firms’ commitment to sustainability. Conversely, once sustainability is comprehensively embedded within strategic planning and organizational decision-making, external recognition increasingly reflects the firm’s demonstrated strategic orientation rather than the existence of a dedicated governance committee.

These findings provide further support for the moderating effect identified in Table 4 and are consistent with Substitution Theory and Institutional Theory. Sustainability committees appear to compensate for weaker sustainability strategies by providing board-level oversight, strategic coordination, and accountability for sustainability initiatives. However, as sustainability becomes institutionalized throughout the organization, governance responsibilities become integrated into broader strategic management processes, thereby reducing the incremental value of a specialized sustainability committee in securing external sustainability recognition.

The subsample analysis based on ESG performance yields complementary evidence. The results reveal that the coefficient on ST_Com is insignificant for firms with low ESG performance but becomes positive and statistically significant in both the medium and high ESG subsamples. This finding indicates that sustainability committees alone are insufficient to enhance firms’ likelihood of receiving sustainability awards when sustainability performance remains weak. Instead, governance structures become effective only when accompanied by at least moderate levels of observable sustainability performance.

Similarly, ESG itself is insignificant in the low-ESG subsample but becomes positive and highly significant in both the medium- and high-ESG groups. These findings imply that external awarding bodies primarily recognize firms that demonstrate tangible sustainability achievements rather than relying solely on governance structures. In other words, while sustainability committees facilitate sustainability governance, their effectiveness ultimately depends on firms’ ability to translate governance arrangements into measurable environmental, social, and governance outcomes.

The ESG subsample findings are consistent with Resource Dependence Theory, which argues that governance mechanisms create value by enabling firms to acquire, coordinate, and deploy organizational resources necessary to satisfy stakeholder expectations. Firms exhibiting moderate or high ESG performance have already developed stronger sustainability capabilities, allowing sustainability committees to coordinate, monitor, and communicate these achievements more effectively. By contrast, firms with weak ESG performance lack sufficient sustainability outcomes to support external recognition. Consequently, the existence of a sustainability committee alone cannot compensate for inadequate sustainability performance because awarding bodies ultimately evaluate demonstrated sustainability achievements rather than governance arrangements in isolation.

Regarding the control variables, firm size remains positively associated with sustainability awards across almost all subsamples, suggesting that larger firms consistently possess greater resources and organizational capabilities to pursue sustainability initiatives and obtain external recognition. Firm profitability also exhibits a positive and significant relationship across most specifications, indicating that financially stronger firms are better positioned to invest in sustainability initiatives regardless of their sustainability maturity. Board independence remains positively associated with sustainability awards in most subsamples, highlighting the importance of independent board oversight in strengthening sustainability governance. Conversely, board size and leverage remain largely insignificant across the subsamples, implying that these governance characteristics do not materially influence sustainability recognition after controlling for firms’ sustainability strategy and ESG performance.

The subsample analyses provide strong support for the main regression results while offering additional insights into the mechanisms underlying the observed moderating effects. The evidence consistently indicates that sustainability committees create the greatest incremental value in firms with relatively weak sustainability capabilities, where they compensate for the absence of well-developed sustainability strategies and governance systems. However, as firms institutionalize sustainability through comprehensive strategic integration and consistently strong ESG performance, the incremental contribution of sustainability committees diminishes. These findings reinforce the view that governance mechanisms and substantive sustainability capabilities operate as complementary drivers of external sustainability recognition, with the relative importance of governance structures declining as firms become more mature in their sustainability practices.

6. Additional Analyses

6.1. Robustness Test Using Continuous Measure of Sustainability Committee

To further assess the robustness of the main findings, we replace the binary measure of the sustainability committee (ST_Com) with a continuous sustainability committee score. Unlike the binary indicator, which captures only the existence of a sustainability committee or environmental management team, the continuous score reflects the relative strength and quality of firms’ sustainability governance arrangements. This alternative specification provides a more comprehensive assessment of whether the study’s findings are sensitive to the measurement of the key independent variable. The results are reported in Table 6.

Table 6. Results based on continuous measure of sustainability committee.

	Logit Regression
ST_Com_Continuous	0.2531 * (6.557)
ST_STRAT	0.2652 * (9.287)
ST_Com_Continuous × ST_STRAT	−0.237 * (−2.962)
ESG	0.303 * (20.477)
ST_Com_Continuous × ESG	−0.237 * (−3.957)
FIRMSIZE	0.545 * (15.617)
LEVERAGE	−0.238 (−0.907)
INVESTMENT	−0.269 * (−2.947)
PROFITABILITY	0.643 * (16.617)
BOARDSIZE	0.2531 (0.517)
INDEPENDENCE	0.3979 * (4.177)
Constant	−12.162 * (−32.647)
Year dummies	Yes
Industry dummies	Yes
Country dummies	Yes
n	34,160
Pseudo R2	0.6920
Wald chi2	15,225.02 *

* p-value < 0.01, values in parentheses are Z-Scores.

The findings remain largely consistent with those reported in the main analysis. The sustainability committee score (ST_Com) continues to exhibit a positive and statistically significant association with sustainability awards (β = 0.2531, p < 0.01), confirming that firms with stronger sustainability governance structures are more likely to receive external sustainability recognition. Likewise, ST_STRAT remains positive and highly significant (β = 0.2652, p < 0.01), indicating that firms adopting more comprehensive sustainability strategies have a greater likelihood of obtaining sustainability awards.

Consistent with the primary analysis, the interaction between ST_Com and ST_STRAT remains negative and statistically significant (β = −0.2370, p < 0.01), indicating that the incremental contribution of sustainability committees diminishes as sustainability strategies become more deeply embedded within firms’ strategic decision-making processes. Similarly, ESG continues to exert a positive and highly significant influence on sustainability awards (β = 0.3030, p < 0.01), while the interaction between ST_Com and ESG remains negative and statistically significant (β = −0.2370, p < 0.01). The control variables generally exhibit results consistent with the baseline models. The model also demonstrates strong explanatory power, with a Pseudo R² of 0.6920 and a highly significant Wald Chi-square statistic (15,225.03; p < 0.01). These findings further support the argument that superior sustainability strategies and ESG performance partially substitute for formal governance mechanisms in enhancing firms’ prospects of receiving sustainability awards.

The robustness analysis confirms that the principal findings of this study are not sensitive to the measurement of the sustainability committee variable. Replacing the binary indicator with a continuous sustainability committee score produces qualitatively similar results, reinforcing the conclusion that sustainability committees positively influence firms’ likelihood of receiving sustainability awards. At the same time, the strength of this relationship is moderated by corporate sustainability strategy and ESG performance. These findings provide additional confidence in the stability and reliability of the study’s empirical conclusions.

6.2. Endogeneity Analysis Using the IVProbit Model

Endogeneity may arise from reverse causality, omitted variable bias, or measurement error, potentially leading to biased and inconsistent parameter estimates [78]. To mitigate these concerns, we employ a two-stage instrumental variable approach using the IVProbit estimator in STATA. Given that the dependent variable (ST_Award) is binary, the conventional two-stage least squares (2SLS) estimator is inappropriate because it assumes a continuous dependent variable. The IVProbit model provides a suitable alternative by explicitly accounting for the binary nature of the dependent variable while addressing the potential endogeneity of the sustainability committee variable.

Following the governance literature, we employ the existence of an environmental management team (E_TEAM) as an instrumental variable for ST_Com. The choice of this instrument is based on the premise that firms with dedicated environmental management teams are more likely to establish formal sustainability committees because both mechanisms reflect stronger sustainability governance structures [79]. Nevertheless, environmental management teams primarily focus on implementing and coordinating operational environmental initiatives, whereas sustainability awards recognize broader environmental, social, and governance achievements. Consequently, E_TEAM is expected to influence firms’ likelihood of receiving sustainability awards indirectly through its effect on sustainability governance rather than through a direct impact on external award recognition. As with most governance-related instrumental variables, however, the validity of the exclusion restriction cannot be tested directly and should therefore be interpreted with appropriate caution.

The results of the IVProbit estimation are reported in Table 7. The first-stage regression demonstrates that E_TEAM is positively and highly significantly associated with ST_Com (β = 0.559, p < 0.01), confirming the relevance of the instrumental variable and indicating that firms with dedicated environmental management teams are more likely to establish sustainability committees. Furthermore, the first-stage results reveal positive and significant associations between ST_STRAT, ESG, FIRMSIZE, and PROFITABILITY and the likelihood of establishing a sustainability committee, whereas LEVERAGE and BOARDSIZE remain statistically insignificant.

Table 7. Results of the 2-stage IV Probit model to test for endogeneity.

	Stage 1	Stage 2
E_TEAM	0.559 * (27.921)
ST_Com		1.384 * (9.391)
ST_STRAT	0.380 * (67.981)	−0.371 (0.481)
ESG	0.376 * (25.201)	0.394 * (16.551)
FIRMSIZE	0.371 * (4.211)	0.371 * (12.801)
LEVERAGE	−0.371 (−1.101)	0.371 ** (2.781)
INVESTMENT	−0.371 (−1.661)	0.371 * (2.981)
PROFITABILITY	0.853 * (5.211)	1.102 * (6.801)
BOARDSIZE	−0.384 (−0.901)	0.389 ** (3.281)
INDEPENDENCE	0.510 (2.661)	0.487 * (3.311)
Constant	−0.720 * (−42.621)	−3.227 * (−28.681)
Year dummies	Yes	Yes
Industry dummies	Yes	Yes
Country dummies	Yes	Yes
n	22,748	22,748
Wald chi2	7488.841 *
Wald test of exogeneity		53.001 *

* p-value < 0.01, ** p < 0.05; values in parentheses are Z-Scores.

The second-stage IVProbit estimates remain largely consistent with the baseline regression results, providing further support for the robustness of the study’s conclusions. Specifically, ST_Com continues to exert a positive and highly significant effect on ST_Award (β = 1.384, p < 0.01), confirming that firms with sustainability committees are significantly more likely to receive sustainability awards after controlling for potential endogeneity. Likewise, ESG remains positive and statistically significant (β = 0.394, p < 0.01), indicating that superior ESG performance substantially increases the likelihood of receiving external sustainability recognition. In contrast, ST_STRAT is no longer statistically significant in the second-stage estimation, suggesting that its influence becomes less pronounced after accounting for the potential endogeneity of sustainability committee adoption. This finding is consistent with the earlier subsample analyses, which indicate that sustainability committees may partially compensate for differences in firms’ sustainability strategies.

Finally, the Wald test of exogeneity is highly significant (χ² = 53.001, p < 0.01), confirming that treating ST_Com as an endogenous variable is appropriate and justifying the use of the IVProbit estimator. Overall, the endogeneity analysis demonstrates that the principal findings of this study are robust after accounting for potential endogeneity concerns. The positive association between sustainability committees and sustainability awards remains economically and statistically significant, reinforcing the conclusion that sustainability governance constitutes an important determinant of firms’ external sustainability recognition.

7. Conclusions

This study examined the relationship between CSR committees and Sustainability awards and investigated the moderating roles of sustainability strategy and ESG performance. Using an international sample of 36,140 firm-year observations from non-financial firms listed in Bloomberg between 2010 and 2019, the study employed both Logit and Probit regression models to examine the proposed relationships and assess the robustness of the findings.

The empirical results demonstrate that firms with dedicated CSR committees are significantly more likely to receive Sustainability awards, highlighting the importance of board-level sustainability governance in enhancing external recognition of corporate sustainability efforts. These findings support the arguments of stakeholder and signaling theories by suggesting that CSR committees strengthen firms’ credibility, improve stakeholder confidence, and signal a stronger organizational commitment to sustainability. However, the results also reveal that the effectiveness of CSR committees is contingent upon firms’ sustainability maturity. Specifically, sustainability strategy and ESG performance both positively influence the likelihood of receiving Sustainability awards while simultaneously reducing the incremental contribution of CSR committees. This suggests that as sustainability becomes strategically embedded within organizational processes and is reflected in superior ESG performance, external stakeholders increasingly rely on observable sustainability capabilities rather than formal governance structures when evaluating firms for CSR recognition.

The subsample analyses further reinforce these findings by demonstrating that CSR committees provide the greatest value for firms with relatively weak sustainability strategies, where they compensate for less developed sustainability capabilities through stronger governance, oversight, and coordination. Conversely, among firms with mature sustainability strategies and superior ESG performance, CSR recognition is driven primarily by substantive sustainability achievements rather than by the existence of dedicated governance committees. These findings indicate that CSR committees and sustainability capabilities should not be viewed as competing mechanisms but rather as complementary governance instruments whose relative importance changes as firms progress along their sustainability journey.

The findings of this study provide important practical implications for boards of directors, CSR committees, firms, investors, and policymakers. First, the results highlight the critical role of boards of directors in embedding sustainability within corporate governance. Boards should view CSR committees not merely as a compliance mechanism but as a strategic governance instrument that facilitates board oversight, enhances accountability, and aligns sustainability objectives with long-term corporate strategy. At the same time, the findings indicate that the effectiveness of CSR committees depends on the extent to which sustainability is integrated into the firm’s overall strategic direction and operational practices. Accordingly, boards should ensure that sustainability considerations are incorporated into strategic decision-making rather than delegated exclusively to a specialized committee.

Second, the findings offer important implications for CSR committees. Firms without well-developed sustainability strategies can use CSR committees to coordinate sustainability initiatives, strengthen governance, and demonstrate their commitment to responsible business practices. However, as firms develop more comprehensive sustainability strategies and stronger ESG performance, CSR committees should evolve from performing monitoring and compliance functions primarily to becoming strategic advisors that guide sustainability innovation, oversee ESG implementation, facilitate cross-functional coordination, and ensure the continuous alignment of sustainability objectives with corporate strategy. This transition enables CSR committees to create value beyond symbolic governance and contribute directly to long-term sustainability performance.

Third, the findings guide corporate managers. To maximize the likelihood of receiving CSR recognition, firms should integrate the activities of CSR committees with broader sustainability strategies and ESG initiatives. Rather than relying solely on the existence of a CSR committee, organizations should ensure that measurable sustainability outcomes, transparent reporting practices, and continuous improvements in ESG performance support governance structures.

The findings also have implications for investors and other stakeholders. Investors should not rely exclusively on the existence of CSR committees as an indicator of sustainability commitment. Instead, governance structures should be evaluated alongside firms’ sustainability strategies and ESG performance, as these factors provide stronger evidence of substantive sustainability capabilities. This perspective is particularly relevant for ESG-oriented investors and sustainability rating agencies seeking to distinguish between symbolic governance arrangements and genuine sustainability performance.

Finally, the study provides valuable implications for policymakers. The findings suggest that effective sustainability governance extends beyond establishing board committees and requires the integration of sustainability into corporate strategy and organizational processes. Policymakers should therefore encourage comprehensive sustainability governance frameworks that promote both robust governance structures and transparent disclosure of sustainability strategies and ESG outcomes. In addition, policy initiatives and corporate governance guidelines should emphasize the strategic responsibilities of CSR committees, encouraging firms to disclose not only the existence of these committees but also their roles, activities, and contributions to sustainability decision-making and long-term value creation.

This study has limitations that provide opportunities for future research. First, although the study employs a large international sample of non-financial firms from Bloomberg, the findings may not fully capture institutional and cultural differences in corporate governance and sustainability practices across countries. Future studies could investigate whether the relationships identified in this study vary across different legal systems, investor protection regimes, or levels of sustainability regulation to provide a deeper understanding of the contextual factors influencing CSR recognition.

Second, this study measures CSR governance using the existence of a CSR committee. While this measure captures an important governance mechanism, it does not reflect differences in committee effectiveness, such as committee independence, expertise, meeting frequency, gender diversity, authority, or the extent of board involvement in sustainability oversight. Future research could examine how these characteristics influence the effectiveness of CSR committees in promoting sustainability outcomes and securing CSR recognition. Likewise, although we employ an instrumental variable approach to mitigate potential endogeneity, the validity of the instrumental variable relies on the exclusion restriction, which cannot be tested directly. Specifically, while the existence of an environmental management team is theoretically associated with the establishment of a CSR committee, it may also be indirectly related to broader sustainability outcomes. Therefore, future research could strengthen causal inference by employing alternative instrumental variables or quasi-experimental research designs, such as industry-level instruments, regulatory shocks, or natural experiments, to further validate the relationship between CSR committees and Sustainability awards.

Third, the study focuses on Sustainability awards as an external measure of sustainability recognition. Although Sustainability awards provide an important indicator of stakeholder recognition, they represent only one dimension of firms’ sustainability success. Future studies could investigate whether similar governance mechanisms influence other sustainability outcomes, such as sustainability reporting quality, stakeholder trust, corporate reputation, firm value, or long-term financial performance.

Fourth, although the study demonstrates that sustainability strategy and ESG performance moderate the relationship between CSR committees and Sustainability awards, these variables may also play more complex roles in firms’ sustainability governance. Future research could examine additional organizational factors, such as board sustainability expertise, ownership structure, CEO characteristics, corporate culture, digital transformation, or sustainability innovation, as potential mediating or moderating mechanisms that explain how governance structures translate into sustainability recognition.

Finally, the study adopts a quantitative research design based on archival data, which identifies statistical associations but provides limited insight into the internal decision-making processes through which CSR committees influence sustainability strategies and external recognition. Future research could employ qualitative methods, such as case studies or interviews with directors and CSR committee members, to better understand how board-level sustainability governance is implemented in practice and how it contributes to achieving Sustainability awards.