Which internal corporate governance mechanisms drive corporate sustainability?

/methodology/approach: This study conducts a systematic review to analyze the relationship between corporate governance and corporate sustainability.

As enterprises are directed through corporate governance, the integration of corporate sustainability is a necessary step to secure long-term firm success and react to recent social and environmental developments. Against this background, this paper investigates the following research question: Which internal corporate governance mechanisms drive corporate sustainability?

The results gained from a sample of 56 articles show findings for different internal corporate governance mechanisms such as board diversity, board independence, the board size, the board-level sustainability committee, the role of the CEO, ownership concentration, and the disclosure and transparency practice, which play a role in guiding a firm in a sustainable direction and achieving sustainability integration. The role of board diversity is discussed the most throughout the literature.

The results suggest that boards should be designed diversely and independently while having an appropriate size to work effectively. Furthermore, the sustainability strategies of CEOs should be motivated by incentives. Nevertheless, there has to be a consideration of the interrelations of the investigated mechanisms.

The results suggest that being more transparent and showing non-financial performance at least compliant to sustainability regulations increases the orientation on stakeholder interests and long-term focus.

The paper systemizes the research field related to internal corporate governance mechanisms and corporate sustainability to give an overview of the current research landscape and discuss the identified drivers. Overall, this research comprehensively sketches of what is known and unknown about the questions addressed in the systematic review.