Balanced gender boards and environmental, social, and governance performance

Abstract

This study examines the relationship between gender balance on boards and environmental, social, and governance (ESG) performance. The results show that gender diversity has a positive impact on a company’s ESG performance, suggesting that a balanced representation of women and men on boards is beneficial for a company’s sustainable efforts. Furthermore, we provide evidence of the optimal level of diversity that maximizes ESG performance. ESG performance of companies reaches its maximum when the proportion of female directors on the board is approximately 60 percent. The results show that gender diversity on boards should be recognized not just as a milestone towards achieving gender equality but as a strategic asset that impacts companies’ outcomes. The study argues that fostering gender diversity in corporate boards is not merely an obligation to promote equality and fairness but is also a crucial tool in corporate governance to improve a company’s ESG performance. Furthermore, it provides valuable insights for academics, business leaders, and policymakers committed to fostering a sustainable and inclusive business world.

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