From Board Governance to SDGs Integration: ESG Performance and Controversies in the MENA Region

ABSTRACT This study examines how board characteristics influence firms' integration of the Sustainable Development Goals (SDGs), focusing on the mediating role of environmental, social, and governance (ESG) performance and the moderating effect of ESG controversies. Using panel data from 349 listed firms across 10 Middle East and North Africa (MENA) countries between 2015 and 2024, this study employs a multi‐method approach combining instrumental‐variables two‐stage least squares (IV‐2SLS), structural equation modeling (SEM), and a moderated‐mediation framework. Board attributes, namely, gender diversity, board size, expertise, and independence are analyzed. The findings reveal that ESG performance significantly mediates the relationship between board characteristics and SDGs integration, with partial mediation for gender diversity and competitivemediation for board size and expertise. Board independence exhibits no meaningful direct or total effect and only a marginal indirect effect. Additionally, ESG controversies significantly moderate the ESG–SDGs relationship, suggesting that reputational sensitivity can strengthen firms' sustainability responses. This study contributes to the literature by integrating multiple governance theories and addressing the underexplored regional context. It also offers practical implications for promoting inclusive governance, ESG training, and stronger accountability in emerging markets, reinforcing the strategic role of ESG in enhancing corporate legitimacy and societal impact.