Abstract

Corporations are under mounting pressure from diverse stakeholders to address their climate change commitments amidst rising environmental concerns. In response, companies are improving their governance structures to strengthen their climate commitments. This study explores the impact of green directors on the disclosure of climate change targets (CTD), prompted by the recent developments in corporate structures. The dataset for this study includes companies listed on China’s A-share market from 2010 to 2022. The findings indicate that the inclusion of directors with environmental backgrounds on boards enhances the level of CTD. Results also reveal that the entry of eco-conscious investors amplifies the impact of green directors on CTD. The mediation results identify corporate environmental attention as a key mechanism through which green directors drive CTD. The findings remain robust when considering different proxies, variations over time, and checks for endogeneity. Additionally, heterogeneity analysis suggests that the influence of green directors on CTD is pronounced for sensitive sector firms and those exhibiting low sustainability performance. This study contributes to the existing body of knowledge on corporate environmental governance and provides valuable insights for policymakers and corporate leaders seeking to enhance environmental transparency and accountability.

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