The Impact of Corporate Governance on Corporate Sustainability: Empirical Insights from Listed Companies in Emerging Economy

This study investigates the impact of corporate governance practices on the corporate sustainability performance of listed companies in Sri Lanka. Most extant studies also rely on standalone corporate social responsibility (CSR) disclosures rather than more robust measures representing sustainability commitments across multiple aspects like the environment and society. This research aims to address these gaps by analyzing proprietary panel data from sustainability-reporting listed firms in Sri Lanka over 4 years (2018–2021). It employs comprehensive metrics gauging corporate board diversity, ownership patterns, transparency levels, audit quality, and control variables as potential drivers of multidimensional sustainability scores along economic, environmental, and social dimensions. Random effects panel data regression analysis shreds of evidence that governance attributes enhancing transparency, accountability, board independence, and diversity are associated positively with sustainability performance. The presence of an audit committee, larger board size, or foreign experts correlates strongly with higher sustainability scores, highlighting their role in enabling stakeholder-inclusive decisions and credible disclosures. However, factors like concentrated family ownership and CEO duality display negative effects. Findings provide timely empirical guidance to harness governance policy and structures towards advancing corporate sustainability agendas, supporting stakeholders rather than only shareholder primacy. Regulators must prioritize mandating governance transparency, diverse board representation, and linking executive incentives to sustainability.