Does board industry expertise foster ESG strategy? the mediating role of environmental innovation

Purpose: The study aims to empirically examine the effect of board industry expertise on environmental, social and governance (ESG) strategy, and the mediating role of environmental innovation. Design/methodology/approach: Using an unbalanced sample of 341 publicly traded Italian non-financial firms and data collected from multiple sources over the period 2017–2021, this study applies single-mediator models via ordinary least squares regressions. Findings: Results indicate that directors’ industry expertise improves the corporate orientation toward sustainability strategy that is reflected in ESG objectives. This effect is partly mediated by a greater level of environmental innovation. Practical implications: The article suggests regulators to promote eco-innovation-friendly investment initiatives due to their value in advancing corporate sustainability strategies. Originality/value: The research fills a gap in the literature that has never explored the effect of board industry expertise on sustainability-related outcomes. Moreover, it advances the debate on the implications of board human capital by assessing its influence on ESG strategy and environmental innovation. © 2024, Emerald Publishing Limited.