Disentangling board social and human capital: what really drives corporate sustainability?

Building on the multiple dimensions of board human capital and board social capital, this study investigates how these dimensions influence Environmental, Social, and Governance (ESG) performance. We focus on two components of human capital, represented by the board's specific industry skills and the board international background, and two components of social capital, represented by directors’ external connections with other corporations (external social capital) and directors' co-working experience inside the board (internal social capital). Using a sample of 590 listed companies from the 27 European Member Countries, over the pandemic years (2019 to 2022), our main findings show that all four dimensions of board capital significantly enhances ESG scores. However, this result changes when we focus on the single sub-scores of the ESG score. What matters for environmental performance is board social capital (internal and external) and board industry-specific skills (which represents one dimension of board human capital). Conversely, what matters for social corporate performance is the two components of board human capital and the external social capital. In the case of governance score, only the international background of the board and the internal social capital are statistically significant. Our results call for further investigations on the differential roles of human and social capital on ESG.