The Influence of the Social Dimension of Corporate Sustainability on Financial Performance in the petroleum Sector: The moderation effect of Board Diligence

Abstract

This paper investigates the influence of the Social Dimension of corporate sustainability on the financial performance of global petroleum companies, with a particular emphasis on the moderating role of board diligence. Drawing upon the resource-based view and stakeholder theory, the research analyzes data from 88 petroleum companies across 27 countries over a five-year period from 2018 to 2022. Through the use of panel data analysis, we reveal that factors such as human rights, community engagement, and product responsibility have a positive effect on financial performance. In contrast, the workforce component shows a negative influence on financial outcomes. Additionally, the study finds that board diligence significantly moderates the effects of human rights, community engagement, product responsibility, and workforce on financial performance.
These findings underscore that financial success in the petroleum industry is intricately linked to the proactive role of the board in shaping and implementing sustainability initiatives, highlighting the necessity for governance structures that align sustainability practices with financial goals.

Keywords: Corporate Sustainability, Social Dimension, Financial Performance, Petroleum firms, Board Diligence