How Board Diversity Influences ESG Performance: Board Independence as a Moderator

[Purpose] This study examines the impact of board diversity focusing on gender, age, and tenure on firms’ Environmental, Social, and Governance (ESG) performance. It further explores how board independence moderates the relationships between different dimensions of diversity and ESG performance. [Methodology] This study examined 281 FSSD－listed firms, measuring board diversity with the Blau index and ESG performance using KCGS ratings. Conditional effects were tested through hierarchical regression and PROCESS Macro, with the Johnson－Neyman method identifying significant moderation points. [Findings] Gender and tenure diversity significantly improve ESG performance, while age diversity shows a negative effect. Moreover, board independence strengthens the positive effects of gender and tenure diversity but does not significantly moderate the relationship between age diversity and ESG performance. An analysis of the moderating role of board independence across disaggregated ESG dimensions indicates that gender diversity exerts a strengthened positive effect exclusively in the social and governance areas. [Implications] This study reinforces both stakeholder and agency theories by demonstrating that board structure plays a pivotal role in shaping ESG performance. It emphasizes the empowerment of diverse board members through sound governance and the importance of addressing generational tensions that may emerge in boards with age diversity.