Relationship between board characteristics, renewable energy investment, sustainability performance and firm performance among oil & gas firms in Sub Saharan Africa
List of Authors
  • Ahmed Razman Abdul-latiff , Shehu Umar

Keyword
  • Firm Performance, Investment, Renewable Energy, Sustainability Performance, Board Characteristics

Abstract
  • This paper aims to provide a conceptual framework on the moderating role of board characteristics on the relationship between renewable energy investment, sustainability performance indicators (environmental, social and governance) and firm financial performance of listed oil and gas firms in sub-Saharan Africa. The fundamental idea supporting the link between the board characteristics, renewable energy, sustainability performance and firm financial performance is supported by legitimacy and Resource dependence theories. The factors of, environmental, social engagement and governance as well as transition to renewable energy investment are considered as a new trend for the oil & gas sector to improve their reputation and gain societal acceptance and diversify their business strategy for firm performance and firm sustainability. This paper consists of studying and evaluating previous literature on the subject of sustainability performance and firms’ financial performance. The literature search encompasses online materials source of article journals and chapter in a book. References are based on online databases such as Web of Science, Scopus, Science Direct and Google Scholar. This study has identified that most of the previous literature investigating relationship between board characteristics, sustainability performance and firm financial performance focused on the direct relationship among the variables. In addition, the previous literature presented a mixed finding also the study finds environmental measures outlined in the Paris Agreement, aimed at reducing global climate change, have the potential to pose a significant risk to the financial stability and survival of oil and gas firms. This paper has successfully developed a conceptual framework that is helpful for future research in this area besides, this study has provided new insight on the effect of board characteristics, renewable energy investment, sustainability performance on firm financial performance of oil & gas firms in sub–Saharan Africa. Additionally, based on this study it is expected that the oil & gas firms should broaden their commercial scope by allocating and investing resources towards the transition to renewable energy.

Reference
  • 1. Adams, D., Adams, K., Attah-boakye, R., Ullah, S., Rodgers, W., & Kimani, D. (2022). Social and environmental practices and corporate financial performance of multinational corporations in emerging markets : Evidence from 20 oil-rich African countries. Resources Policy, 78(July 2021), 102756. https://doi.org/10.1016/j.resourpol.2022.102756

    2. Adonye, U., & Biradawa, K. (2022). SUSTAINABILITY REPORTING AND FIRM VALUE OF LISTED OIL AND GAS COMPANIES IN NIGERIA. 3(2), 277–322. https://doi.org/10.47509/IJABER.2022.v03i02.05

    3. Aguilera, R. V., Aragón‐Correa, J. A., Marano, V., & Tashman, P. (2021). The Corporate Governance of Environmental Sustainability: A Review and Proposal for More Integrated Research. SSRN Electronic Journal, January. https://doi.org/10.2139/ssrn.3760077

    4. Aiyesan, O. O. (2023). Sustainability Reporting and Financial Performance of Listed Manufacturing Firms in Nigeria. Gusau Journal of Accounting and Finance, 3(3), 33. https://doi.org/10.57233/gujaf.v3i3.180

    5. Alagbe, E.A*1, Jimoh, S.O*2, and Jimoh, B. A. (2021). Effect of Exchange Rate Changes on Financial Performance of Listed Oil and Gas Companies in Nigeria. 10(3).

    6. Asikhia, O. U., Fabunmi, S. A., & Akinlabi, B. H. (2023). Corporate Governance Mechanisms and Financial Performance of Listed Oil and Gas Firms in Nigeria : An Empirical Assessment. 23(16), 41–54. https://doi.org/10.9734/AJEBA/2023/v23i161025

    7. Augustine, A., Emmanuel, I., & Ugochukwu, J. (2021). GLOBAL REPORTING INITIATIVE AND SUSTAINABILITY REPORTING PRACTICES : A STUDY OF NIGERIA AND SOUTH AFRICA OIL AND GAS FIRMS. 1(12), 1–25.

    8. Bezawada, B., & Adavelli, S. R. (2020). Corporate Governance , Board Characteristics and Performance of Indian Banks : An Empirical Study. 10(3), 83–87.

    9. Bloom, N., & Reenen, J. Van. (2013). 済無No Title No Title No Title. NBER Working Papers, 89. http://www.nber.org/papers/w16019

    10. BOARD CHARACTERISTICS AND FIRM ’ S FINANCIAL PERFORMANCE : EVIDENCE FROM PUBLIC LISTED Andrew Oluwamayowa Ojo. (2021).

    11. Calgary, A. (2020). No TitleThe Role of the Board of Directors in Canadian Petroleum Companies during an Energy Transition into Sustainable Energy Sources.

    12. Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct. Business and Society, 38(3), 268–295. https://doi.org/10.1177/000765039903800303

    13. Cheung, K. Y., & Lai, C. Y. (2022). Board Directorships and Carbon Emissions: Curvilinear Relationships and Moderating Roles of Other Board Characteristics. Journal of Risk and Financial Management, 15(12). https://doi.org/10.3390/jrfm15120550

    14. Chin, M. K., Hambrick, D. C., & Trevin, L. K. (2013). Political Ideologies of CEOs : The Influence of Executives ’ Values on Corporate Social Responsibility. https://doi.org/10.1177/0001839213486984

    15. Cong, Y., & Freedman, M. (2011). Advances in Accounting , incorporating Advances in International Accounting Corporate governance and environmental performance and disclosures. 27, 223–232. https://doi.org/10.1016/j.adiac.2011.05.005

    16. Daferighe, E. E., & Etim, E. O. (2023). GREEN BOARD COMMITTEE AND PROFITABILITY OF PUBLICLY TRADED OIL. June.

    17. Doni, F., Corvino, A., & Martini, S. B. (2022). Corporate governance model , stakeholder engagement and social issues evidence from European oil and gas industry. 18(3), 636–662. https://doi.org/10.1108/SRJ-08-2020-0336

    18. Fabian, O., Onuora, J. K. J., & Obianuju, O. (2022). Environmental Accounting Practices, Social Responsibility Disclosures and Firm Value; Evidence from listed Oil and Gas Firms in Nigeria. International Journal of Economics and Business Management, 8(1), 29–42. www.iiardjournals.org

    19. Fouquet, R., & Pearson, P. J. G. (2012). Past and prospective energy transitions: Insights from history. Energy Policy, 50, 1–7. https://doi.org/10.1016/j.enpol.2012.08.014

    20. Grosu, V., Tiron-tudor, A., Socoliuc, M., Ciubotariu, M., Hlaciuc, E., Macovei, A., Tulvinschi, M., & Melega, A. (2023). Financial sustainability of oil and gas companies — basis for building resilience strategies. May, 1–13. https://doi.org/10.3389/fenvs.2023.1205522

    21. Hao, J., Wang, H., Chen, S., Cai, B., Ge, L., & Xia, W. (2014). Pyrolysis characteristics of the mixture of printed circuit board scraps and coal powder. Waste Management, 34(10), 1763–1769. https://doi.org/10.1016/j.wasman.2013.10.043

    22. Harun, M. S., Hussainey, K., Mohd Kharuddin, K. A., & Farooque, O. Al. (2020). CSR Disclosure, Corporate Governance and Firm Value: a study on GCC Islamic Banks. International Journal of Accounting and Information Management, 28(4), 607–638. https://doi.org/10.1108/IJAIM-08-2019-0103

    23. Hermundsdottir, F., & Aspelund, A. (2022). Competitive sustainable manufacturing - Sustainability strategies , environmental and social innovations , and their effects on firm performance. Journal of Cleaner Production, 370(October 2021), 133474. https://doi.org/10.1016/j.jclepro.2022.133474

    24. Hongming, X., Ahmed, B., Hussain, A., Rehman, A., Ullah, I., & Khan, F. U. (2020). Sustainability Reporting and Firm Performance : The Demonstration of Pakistani Firms. https://doi.org/10.1177/2158244020953180

    25. International Energy Agency (IEA). (2023). Oil 2023. Iea. www.iea.org/t&c/

    26. Jeremiah, M. S., & Etim, R. S. (2022). Issue-based environmental sustainability factors in Nigeria ’ s oil and gas industry : the perspectives of academics. 19(1), 113–151. https://doi.org/10.1108/cpoib-02-2020-0012

    27. Journal, I., Economics, O. F., & Studies, F. (2022). IMPACT OF ECONOMIC INDICATORS ON COMPANY SUSTAINABILITY AND CORPORATE PERFORMANCE FOR SUSTAINABLE DEVELOPMENT : COMPARABILITY ANALYSIS BETWEEN NIGERIAN AND SOUTH. 8055, 176–201. https://doi.org/10.34109/ijefs.

    28. Kennedy, H. P., Farrell, T., Paden, R., Hill, M. S., Rima Jolivet, R., Cooper, B. A., & Rising, S. S. (2011). A randomized clinical trial of group prenatal care in two military settings. Military Medicine, 176(10), 1169–1177. https://doi.org/10.7205/MILMED-D-10-00394

    29. Khatri, I., & Kjærland, F. (2023). Sustainability reporting practices and environmental performance amongst nordic listed firms. Journal of Cleaner Production, 418(May), 138172. https://doi.org/10.1016/j.jclepro.2023.138172

    30. Kountriasova, A. (2022). Louvain School of Management Internal and external factors affecting oil and gas companies ’ climate change performance. Thesis.

    31. Liu, Y., Miletkov, M. K., Wei, Z., & Yang, T. (2015). Board independence and firm performance in China. Journal of Corporate Finance, 30, 223–244. https://doi.org/10.1016/j.jcorpfin.2014.12.004

    32. Mahmood, Z., Kouser, R., & Masud, M. A. K. (2019). An emerging economy perspective on corporate sustainability reporting – main actors’ views on the current state of affairs in Pakistan. Asian Journal of Sustainability and Social Responsibility, 4(1). https://doi.org/10.1186/s41180-019-0027-5

    33. Makoto, N., & Pascal, N. (2012). Board size and corporate risk-taking : Further evidence from Japan. Corporate Governance: An International Review, 20(4), 369–387.

    34. Makpotche, M., Bouslah, K., & Zali, B. B. M. (2023). Corporate governance mechanisms and renewable energy transition. https://doi.org/10.1108/CG-06-2023-0245

    35. Martín, C. J. G. (2019). Do board characteristics affect environmental performance ? A study of EU firms. February, 1–21. https://doi.org/10.1002/csr.1775

    36. Meditari Accountancy Research Article information : (2018). April 2010. https://doi.org/10.1108/10222529201000001

    37. Mlay, L., Temu, S., & Mataba, L. (2023). The Impact of Board Characteristics on the Financial Performance of Savings and Credit Co-operative Societies in Arusha and Dar es Salaam, Tanzania. Tanzanian Economic Review, 13(1), 130–155. https://doi.org/10.56279/ter.v13i1.162

    38. Muhammad, A., Amedi, R., & Saeed Mustafa, A. (2020). Accounting Analysis Journal Board Characteristics and Firm Performance: Evidence From Manufacture Sector of Jordan ARTICLE INFO ABSTRACT. Accounting Analysis Journal, 9(3), 146–151. https://doi.org/10.15294/aaj.v9i3.39577

    39. Murtaza, S. (2020). Do ownership and board characteristics enhance firm performance ? A corporate governance perspective. June. https://doi.org/10.1002/pa.2515

    40. Nugraha, A. P. (2023). The Influence of Director Expertise and Executive Expertise on Firm Performance (An Empirical Study of the Two-tier Board System in Indonesia). International Journal of Accounting & Finance in Asia Pasific, 6(1), 53–69. https://doi.org/10.32535/ijafap.v6i1.2177

    41. Nyore, O. S., & E-obodoekwe, C. N. (2021). Impact of Environmental , Social and Governance Dimensions of Corporate Social Responsibility on Firm Performance : Evidence from Nigeria IMPACT OF ENVIRONMENTAL , SOCIAL AND GOVERNANCE DIMENSIONS OF CORPORATE SOCIAL RESPONSIBILITY ON FIRM PERFORMANCE : E. January. https://doi.org/10.18488/journal.73.2021.92.220.236 Of, F., & Sciences, S. (2020). MASTER ’ S THESIS.

    42. Pearson, P. J. G., & Foxon, T. J. (2012). A low carbon industrial revolution ? Insights and challenges from past technological and economic transformations. Energy Policy, 50, 117–127. https://doi.org/10.1016/j.enpol.2012.07.061

    43. Pervin, R., & Rashid, M. M. (2019). Board Characteristics and Firm Performance: Evidence from Listed Banking Institutions of Bangladesh. The Cost and Management, 47(1), 3–10.

    44. Qiu, Y., & Trojanowski, G. (2016). Board Attributes , Corporate Social Responsibility Strategy , and Corporate Environmental and Social Performance. 1–48. https://doi.org/10.1007/s10551-014-2460-9

    45. Rahi, A. F., Johansson, J., Blomkvist, M., & Hartwig, F. (2023). Corporate sustainability and financial performance: A hybrid literature review. Corporate Social Responsibility and Environmental Management, May, 1–15. https://doi.org/10.1002/csr.2600

    46. Saleh, M. W. A., & Islam, M. A. (2020). Does Board Characteristics Enhance Firm Performance? Evidence from Palestinian Listed Companies. International Journal of Multidisciplinary Sciences and Advanced Technology, 1(4), 84–95. http://www.ijmsat.com

    47. Schultze, W., & Trommer, R. (2012). The concept of environmental performance and its measurement in empirical studies. Journal of Management Control, 22(4), 375–412. https://doi.org/10.1007/s00187-011-0146-3

    48. Shah, S. Q. A., Lai, F. W., Shad, M. K., & Jan, A. A. (2022). Developing a Green Governance Framework for the Performance Enhancement of the Oil and Gas Industry. Sustainability (Switzerland), 14(7). https://doi.org/10.3390/su14073735

    49. Sharma, D., Chakraborty, S., & Rao, A. A. (2023). The Relationship of Corporate Social Responsibility and Firm Performance : A Bibliometric Overview. March, 1–14. https://doi.org/10.1177/21582440231158021

    50. Simnett, R., Vanstraelen, A., & Chua, W. F. (2009). Assurance on Sustainability Reports : An International Comparison. 84(3), 937–967.

    51. Solomon, B. D., & Krishna, K. (2011). The coming sustainable energy transition: History, strategies, and outlook. Energy Policy, 39(11), 7422–7431. https://doi.org/10.1016/j.enpol.2011.09.009

    52. Tjcd-, M. I. D., Type, M., & Keywords, O. P. (2022). Fo r P ee r R ev iew On Fo r P ee r R iew On ly. 1–22.

    53. Villiers, C. De, Naiker, V., & Staden, C. J. Van. (2011). The Effect of Board Characteristics on Firm Environmental Performance. June 2020. https://doi.org/10.1177/0149206311411506

    54. Yassine, S. (2021). Corporate social performance : Key Performance Indicators Performance sociale des entreprises : Indicateurs clés de performance. 5, 166–180.

    55. Zhong, M., & Bazilian, M. D. (2018). Contours of the energy transition : Investment by international oil and gas companies in renewable energy. The Electricity Journal, 31(1), 82–91. https://doi.org/10.1016/j.tej.2018.01.001