DEI Policies and Practices’ Effect on Sustainability Performance: An Ethical Leadership Perspective

Authors

  • Raluca-Andreea Achim Bucharest University of Economic Studies https://orcid.org/0009-0007-4743-2555
  • Camelia Iuliana Lungu Bucharest University of Economic Studies
  • Chirata Caraiani Bucharest University of Economic Studies
  • Cornelia Dascalu Bucharest University of Economic Studies

DOI:

https://doi.org/10.34190/ecmlg.21.1.4150

Keywords:

Ethical leadership, Sustainability performance, Corporate governance mechanisms, DEI policies and practices

Abstract

Multicultural and heterogenous society has prompted policymakers and regulators to prioritize creation of a diverse, equitable, and inclusive economic environment. In addition, noticeable increase in companies’ focus for ethical actions is driven to improve corporate performance and to build stakeholders’ confidence and trustworthiness. Hence, the aim of this paper is to investigate the effect of ethical leadership related to diversity, equity and inclusion (DEI) policies and practices on sustainability performance. Considering the interdisciplinary nature of this relationship, the research integrates a holistic theoretical framework. Governance theories explain the equilibrium between managers’ behavior and stakeholders’ expectations, economic theories describe the understanding of resource allocation for strategic decisions, while social theories provide evidence regarding human behavior and culture in sustainable companies. The present study utilizes the Diversity and Inclusion Score (DIS), provided by the LSEG methodology, to present the integrated DEI policies and practices. Muchmore, specific mechanisms of corporate governance related to board cultural diversity, board gender diversity, and executive gender diversity extend the measurement of DEI policies and practices. Sustainability performance is assessed through environmental, social and governance (ESG) score. The data are collected from Thomson Reuters Eikon database for non-financial international companies, during the 2020-2024 period. A final sample of 4,163 company-year observations is used to respond to three research hypotheses. Fixed effects robust regressions are employed to emphasize the impact of integrated and specific diversity-oriented policies and practices on ESG performance. Results indicate significant positive influence of DEI policies and practices on sustainability performance. Muchmore, the moderating effects included in analysis show that irrespective of the specific corporate governance mechanisms of diversity, the presence of integrated DEI policies and practices reduces the positive and significant impact on companies’ sustainability performance. The robustness test emphasizes the positive influence that various pillars of DIS have on ESG performance. With a multi-layered approach, this study contributes to academic and practical understanding by promoting diverse and inclusive leadership as a key corporate governance mechanism that enhances sustainability performance.

Author Biographies

Raluca-Andreea Achim, Bucharest University of Economic Studies

Raluca Andreea ACHIM is a PhD Student at Doctoral School of Accounting, Bucharest University of Economic Studies, Romania. Her thesis focuses on Modelling an integrated culture of diversity, equity and inclusion (DEI) in the context of corporate governance. Current research interests are challenges and opportunities of DEI practices within sustainable frameworks.

Camelia Iuliana Lungu, Bucharest University of Economic Studies

Camelia Iuliana LUNGU is Professor at Bucharest University of Economic Studies, Romania and PhD coordinator in accounting. Current research topics are challenges and opportunities of corporate governance policies in post-pandemic period; the role of internal audit and corporate governance mechanisms in risk management; environmental accounting integration in sustainable development models.

Chirata Caraiani, Bucharest University of Economic Studies

Chiraţa CARAIANI is Professor at Bucharest University of Economic Studies, Romania and PhD coordinator in accounting. Current research topics are challenges and opportunities towards a resilient and sustainable economy; green economy: substantiation and development of sustainable business models and technologies within ESG factors context.

Cornelia Dascalu, Bucharest University of Economic Studies

Cornelia DASCALU is a Professor in the Department of Accounting and Audit at Bucharest University of Economic Studies, Romania and PhD coordinator in accounting. Current research interest lies in accounting and education for sustainability, ranging from theory to design and implementation.

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Published

2025-11-04

Issue

Vol. 21 No. 1 (2025): The Proceedings of the 21st European Conference on Management Leadership and Governance, ECMLG 2025

Section

Academic Papers