THE RELATIONSHIP OF BOARD OF DIRECTORS STRUCTURAL CHARACTERISTICS AND THE ENVIRONMENTAL PERFORMANCE OF COMPANY: EVIDENCE FROM BIST COMPANIES
Authors: Aytekin Selcen Sari 
Published: August 2022

Purpose- There has been an increasing awareness about protecting the environment and contributing to sustainability, especially in recent years. This attitude increases the sensitivity that society expects from companies. The environmental performance of the organization plays a key role in establishing strong relations between the organization and the investor, improving the financial performance and maintaining the reputation of the company in the eyes of other stakeholders. At this point, it is expected from the board of directors, which is the top management body of the companies, to determine the strategies to be implemented regarding the environment, as in other organizational strategies. While the steps taken in social responsibility are effective in the success of the board, the success of the company depends on the effectiveness of the board and the decisions it makes. This study aims to reveal the effect of board characteristics on the environmental performance of the companies.
Methodology- As a result of the preliminary literature review, size (number of board members), independence (ratio of indenpendent members) and diversity (ratio of women on boards) from the characteristics of the board were determined as the independent variables of the study. The dependent variable is environmental performance while the control variables are firm size and profitability (ROA). The research model created by using these variables was tested on the data obtained from a sample of companies listed in Borsa Istanbul. Data on the structure of the board and control variables were collected from the financial statements and annual reports of the companies announced on the Public Disclosure Platform. Environmental performance data was obtained from ESG (environment-social-governance) data released by Refinitiv (formerly known as Thomson Reuters). The study was conducted using only the environmental performance sub-dimension data. The data were analyzed in the Smart Pls.
Findings- It is assumed that there will be a positive relationship between the number of board members, the ratio of female and independent members and the environmental performance of the company in the research model. However, none of the variables of the board structure provided statistically significant results on the environmental performance of the company. Thus, all of the research hypotheses were rejected.
Conclusion- The literature refers that independent members can freely express their opinions, while women on boards can bring a different perspective to the board. However, our country has a context that shows the characteristics of a state-dependent business system and the fate of organizations is especially determined by the relations established with political actors and family members of organizations. The independence of the boards in such a context is currently a matter of debate and concerns are expressed that they are not fulfilling their duties as mentioned in the literature. The findings of the study support these concerns. Considering the women on board ratio, it is striking that the number of women on the boards is very low although the companies included in the sample are Turkey's leading companies. Therefore, it is thought that the diversity of the board does not show the expected effect due to the low ratio of women on boards. This also applies to the boards size; the analyzes reveal a conclusion that although the board grows in number as a result of the addition of independent and women members because of the expectations and rules, it is not enough to change the mentality of the dominant managers and it still continues to have an impact.

Keywords: Board structure, environmental performance, board size, board independence, board diversity.
JEL Codes: M10, M14, M19