Does Green Governance Reflect Corporate Sustainability Performance? New Insight From G5 Countries

Green governance plays a crucial role in sustainable performance to improve the green environment; thus, how to contribute to environmental, social, and carbon emissions reporting has attracted the attention of regulators and policymakers. Green governance is often linked to sustainability performance. However, more evidence is needed on the contribution of green governance to sustainability performance. Under this lens, our present study seeks to discover the contribution of green external audits, green committees, environmental monitoring teams, and green governance practices on sustainability performance. Moreover, this study also estimated the threshold effect of green governance on the relationship between green external audits, green committees, environmental monitoring teams, and sustainability performance. A total of 905 non-financial firms listed in G5 countries were incorporated for the period 2013–2023, and data were collected from the professional Data-Stream portal. The quantile fixed effect, GMM-based quantile, and static and dynamic threshold models were employed to investigate the proposed model. Our empirical results revealed that the external assurance of green audits, committees, and governance practices improves sustainability performance. Furthermore, sustainable governance practices are a crucial determinant of ESG reporting and carbon emission performance. However, environmental monitoring teams are unable to contribute to sustainability performance. Moreover, carbon emissions and ESG performance highly responded to green external audits under green governance threshold scores of 59.23% and 59.53%, respectively. In addition, green committee decisions boost environmental and ESG performance when under green governance threshold scores surpassed 59.23% and 59.53%, respectively. Based on our research findings, this study supports the stakeholder theory and legitimacy theory.