Value-enhancing drivers of corporate governance in improving human rights due diligence: Worldwide evidence

Abstract

The study aims to investigate the role of corporate governance in driving effective human rights due diligence (HRDD) practises. The study tests the impact of corporate governance mechanisms on HRDD on an international sample of 509 listed companies operating in high-risk sectors included in the Corporate Human Rights Benchmark. Our findings show the positive effect of corporate governance on HRDD, suggesting that committed corporate governance, especially sustainability committee and board diversity, improves the effectiveness of HRDD carried out by companies. Our study contributes to the literature by providing insights into enhancement-based drivers of corporate governance, which positively impact HRDD. This research also has practical implications for companies because it can help them enhance their HRDD by establishing a sustainability committee or supporting gender diversity within the board. This research addresses social and policy implications considering the European directive on corporate sustainability due diligence directive (CSDDD), which mandates HRDD for large EU and non-EU companies.