Board members' nationality, corruption, and corporate climate change risk in UK firms: Evidence from OECD and Non-OECD board members

Drawing on imprinting theory and upper echelons theory, this study examines how the countries of origin of board members influence their ethical orientations and governance behaviors related to environmental risk management. Specifically, we explore whether board members from non-OECD countries, where corruption is often more culturally tolerated, are associated with higher climate risk in firms compared to their OECD counterparts. Using a sample of 77 publicly traded UK companies listed on the FTSE 100 index across 11 industries from 2013 to 2022, our findings show that board corruption significantly increases climate change risk, particularly when directors are from non-OECD countries. In contrast, the influence of corruption among OECD board members is insignificant. Additional findings highlight the effectiveness of environmental management training in reducing climate risk and caution against poorly aligned executive compensation structures that may exacerbate sustainability challenges. Our results are robust to alternative methods and endogeneity concerns. This study makes significant contributions to the corporate governance and environmentalism literature by demonstrating how culturally induced corruption, shaped by board members’ national backgrounds, affects firm-level climate change risk. For policymakers and regulators, the findings suggest the need for targeted anti-corruption policies, mandatory environmental management training, and improved board composition and incentive alignment to foster ethical leadership and mitigate environmental risk in global firms.