The Impact of Corporate Governance on Enhancing Environmental Sustainability: An Applied Study on the Saudi Energy Sector
Abstract
This study aims to analyse the impact of corporate governance on enhancing environmental sustainability and its reflection on financial performance in the Saudi energy sector during the period (2020–2024), within the framework of the modern orientations of Saudi Vision 2030 toward sustainable development and the promotion of governance practices and environmental disclosure، The study focuses on examining the relationship between corporate governance mechanisms, represented by board size, board independence, and the number of annual board meetings, and Environmental, Social, and Governance (ESG) practices, in addition to measuring the impact of sustainability on firms’ financial performance. The study adopted a descriptive and applied analytical approach using secondary data extracted from the Bloomberg platform at the College of Business Administration, Majmaah University، Multiple regression analysis was conducted using the SPSS program to test the study hypotheses، The study sample included six leading companies in the Saudi energy sector: Saudi Aramco, Petro Rabigh, Saudi Arabian Refineries Company, Arabian Drilling, ADES Holding, and Bahri. The findings revealed a statistically significant impact of corporate governance mechanisms on environmental sustainability practices، Board independence was found to have a positive effect on the level of sustainability implementation, whereas board size showed a negative effect on sustainability indicators due to increased administrative complexity and slower decision-making processes، The results also indicated a positive relationship between cash liquidity and the adoption of sustainability practices، Furthermore, the study found a statistically significant impact of ESG practices on financial performance measured by Return on Assets (ROA), confirming the importance of sustainability as a supporting factor for operational efficiency and long-term value creation.