Does gender diversity in corporate boards and executive management teams influence carbon performance? Evidence from Europe

Abstract

We examine how gender diversity in both corporate boards and executive management teams influence both procedure-oriented carbon management performance (PCMP) and real carbon emission reduction performance (RCRP) of European listed firms. Drawing on multiple theoretical perspectives, our empirical models employ firm fixed-effects estimators to analyse a large dataset, consisting of 5,327 firm-year observations, covering a period of fifteen years. Our findings are three-fold. First, our primary evidence suggests that gender diversity in both corporate boards and executive management teams has a statistically significant positive association with PCMP and RCRP. Second, we provide robust evidence on the link between female directors’ cognitive attributes and PCMP, as well as RCRP. Third, we find that board gender diversity reinforces the positive influence of gender-diverse executive management teams on PCMP and RCRP. Overall, our study results suggest that female directors and executives play complementary roles in influencing and shaping a company’s response to global climate risk. Our results are generally robust to controlling for governance mechanisms, alternative measures/estimations and endogeneities. Our findings have implications for policies relating to gender-responsive governance reforms, as well as the integration of gender diversity into firm-level, country-specific and regional frameworks for climate change policies and reforms.

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