Boards and CSR: exploring the individual perceptions of non-executive directors

ABSTRACT

This study explores how non-executive directors (NEDs) perceive board debates around corporate social responsibility (CSR) and how they make sense of these perceptions. It also investigates how individual NEDs view their role and the role of the board in governing CSR. To these ends, we conducted in-depth interviews with NEDs serving on the boards of French listed companies. The interviewees indicated that CSR was seldom discussed substantively at the board level during the interview period and that NEDs had different levels of comfort with this, depending on their personal views on CSR. To explain our findings, we draw on institutional logics, particularly the agentic approach to logics. More specifically, we detail how NEDs’ diverging views on CSR and on the roles of NEDs and boards in governing CSR reflected their different framings of the relationship between the profit-maximising and sustainability logics and distinguish three such framings: competitive, competing-yet-facilitative and additive. Moreover, we demonstrate that the interplay between board members’ framings shaped CSR board debates and, therefore, the extent to which the sustainability logic was accommodated at the board level. The NEDs’ narratives point to two other factors driving the extent of CSR board debates: external pressures from the business environment to act in line with the sustainability logic and the presence/absence of a CSR-board committee.

KEYWORDS:

• Board of directors
• CSR-board committee
• institutional logics
• non-executive directors

Acknowledgements

We thank participants of CSEAR Spain 2015, CSEAR North-America 2016 and a workshop at IESEG School of Management for their valuable feedback. This paper has also benefited from comments from and/or discussions with Sophie Hoozée, Michelle Rodrigue, Martin Messner, Giovanna Michelon, and Frank de Bakker. We are indebted to all interviewees for their participation and valuable contribution to our research. We wish to thank the IFA (Institut Français des Administrateurs) for helping us contact some interviewees. We would also like to acknowledge the research support offered by Hicham Daher and the FUPL. Finally, we are grateful for the excellent guidance of Carol Tilt, and the very helpful comments and suggestions of two anonymous reviewers throughout the entire review process.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The term “NED” is used to describe board directors who are not executives. This term is often interchangeably used with labels such as “independent”, “outside” or “external” directors. In this paper, the label NED simultaneously refers to what the French CG code calls independent directors (IDs), that is, directors without any links to the company as well as employee-elected directors (EDs). As EDs are not involved in corporate management, they can be regarded as NEDs. For the studies that provided enough details on the directors examined, the literature review specifies whether they focused on IDs or EDs. We use the term “board member” to refer to any member of the board: ID, ED, shareholder or state representative or executive.

2 Although a board’s mandate, as described in national CG codes, typically comprises elements of both logics, it is commonly argued that a shareholder-oriented CG model prevails among Anglo-Saxon countries, and a stakeholder-oriented one is common among countries in Continental Europe (Weimer & Pape, 1999).

3 Referring to the Association of French Private-Sector Companies (Association Française des Entreprises Privées, AFEP) and French Companies Movement Association (Mouvement des Entreprises de France, MEDEF)

4 The most recent regulation was Decree No. 2017-1265, which transposed European directive 2014/95/EU into French law.

5 Companies employing at least 1,000 employees in France or at least 5,000 employees in France and abroad must include at least one ED if the total number of directors is equal to or less than 12 and at least two EDs if the total number of directors is greater than 12 (Commercial Code: L 225-27).

6 The 2018 amendment to the CG code further integrated CSR. It specifies that boards should promote long-term value creation by considering social and environmental aspects; that if needed, directors should be provided with training on such aspects; and that boards should review social and environmental risks from strategy and disclosure perspectives. See https://ecgi.global/node/6812 (accessed March 2, 2023)

7 This interviewee’s mother tongue.

8 These categories should not be considered clearly delineated, exclusive categories but as representing a continuum.

9 Given the importance that ID1 attached to labour aspects, one of the authors attributed an additive framing to this respondent. As ID1 disregarded other non-risk related CSR issues, the authors agreed to categorise ID1 as competing-yet-facilitative.

10 No quotes were so specific to the French context that they were untranslatable.

11 When the interviewees discuss reactions of all categories of NEDs, including IDs and EDs but also shareholder or state representatives, we use the label “directors”.

12 The wording varied at times, as questions were asked in a spontaneous, conversational style.

13 IDs [EDs] were asked to describe their roles. The two non-voting board participants were requested to describe the roles of IDs/EDs.

14 Only for IDs

15 Only for IDs

16 Here, the interviewees described their views on CSR.