Unmasking Sustainability Justice Performance to Achieve SDG 16 in MENA: Insights From Heterogeneous Analysis

In an era where sustainability is paramount, the role of corporate governance in promoting sustainability justice remains underexplored, particularly in emerging regions such as MENA. This study extends the literature on corporate governance and sustainability by examining the relationship between corporate governance mechanisms and sustainability justice performance (SJP) in MENA firms. Drawing on agency theory and normative ethics (consequentialism), the study hypothesizes that effective governance mitigates agency conflicts and fosters ethical decision-making, thereby enhancing sustainability justice. To test these hypotheses, we analyze a dataset of 727 listed firms in MENA from 2010 to 2022, using robust econometric techniques and instrumental variables to address endogeneity concerns. The findings show that, regarding structural attributes, board independence and board size are positively linked with SJP, whereas the board members' shareholding proportion and CEO duality show negative effects. Concerning diversity attributes, gender diversity has a positive impact on SJP, but foreign nationals negatively affect SJP. Regarding process attributes, board members' remuneration, board meetings, and board tenure all have positive links with SJP. Additionally, there is significant heterogeneity in how corporate governance impacts SJP across industries, ownership types, and dimensions of sustainability. The results are robust after rigorous checks and sensitivity analyses. Policymakers should prioritize reforms that strengthen board independence, promote gender diversity, and encourage more frequent board meetings to improve sustainability justice. Additionally, limiting shareholder power, addressing CEO duality, and aligning executive compensation with sustainability goals will enhance governance and foster long-term positive sustainability outcomes across the MENA region.