Multiple Divergences: Board Heterogeneity and ESG Rating Discrepancies

Abstract

Under the strategic objectives of “carbon peak and carbon neutrality”, ESG (Environmental, Social, and Governance) ratings, as a core metric for evaluating corporate performance in these areas, have increasingly attracted attention due to their discrepancies. This paper investigates the role of board heterogeneity in ESG rating discrepancies from a corporate governance perspective. Using a sample of A-share listed companies in China from 2018 to 2022, the study finds that board heterogeneity significantly exacerbates ESG rating discrepancies by reducing information disclosure and dispersing environmental attention. This conclusion remains robust even after addressing endogeneity concerns and conducting further robustness tests. From various dimensions of board heterogeneity, differences in gender, education, professional background, and international experience intensify ESG rating discrepancies, whereas heterogeneity in age and financial background reduces these discrepancies. The findings not only contribute to the theoretical understanding of the factors influencing ESG rating discrepancies but also offer policy implications for regulatory bodies seeking to promote ESG governance from a corporate governance standpoint.