When Diversity Meets Family Owners: ESG Performance inEuropean Publicly Listed Firms

This study investigates how the interaction between board diversity and family as owners shapes firms' ESG performance.Prior research has established that board diversity fosters more informed, ethical, and stakeholder-oriented decision-making,thereby enhancing corporate legitimacy and responsiveness to diverse stakeholder expectations. Building upon this foundation,the present study advances the literature by incorporating the role of family ownership and involvement into this relationship.Drawing on Functionalist Theory and the socioemotional wealth (SEW) perspective, we conceptualize the family as a normativeand institutional actor that embeds long-term orientation, intergenerational responsibility, and prosocial values into corporategovernance structures and decision-making processes. Using a panel dataset of 1199 publicly listed European firms over a 10-year period, we confirm prior literature and find that greater board diversity is consistently associated with improved ESGperformance. While family business status alone does not directly affect ESG performance, it significantly enhances the posi-tive impact of board diversity, positioning families as institutional enablers. Furthermore, succession planning shows a positiverelationship with ESG performance, indicating that structured intergenerational transitions promote ethical consistency andreinforce long-term strategic commitment. In general, our results show that family involvement in the ownership can make thelink between diversity and sustainability stronger.