Research has found that countries where women have higher political status tend to have lower per capita CO2 emissions.
This correlation also applies to companies, with those that have more females on boards performing better in terms of sustainability than those without.
Positive correlation
In our recent study, we investigated whether increasing female directorship on corporate boards – as a consequence of board reforms – has a relationship with companies’ carbon emissions (see graph). Based on a sample of international publicly traded firms from 2002 to 2019, our findings revealed a positive correlation between increased female representation and a decline in carbon emissions . The effects were more pronounced in the listed firms when the reforms were legislative rather than advisory in the country (see panel).
Carbon emissions by companies with high vs low female representation
We also examined the effects of the 2015 Paris Agreement and found that increased female representation, following both board and climate reforms, correlated with lower direct and indirect carbon emissions by companies. Before the Paris Agreement, board reforms primarily influenced the reduction in direct emissions. This suggests that legislative approaches are effective in addressing both board diversity and climate change.
Tables turning
With many countries implementing laws to increase female representation on company boards, sustainability and other areas of performance could be about to improve.
Many high-profile corporate scandals have been attributed in part to a lack of diversity
It has been widely reported that gender diversity on boards can enhance overall effectiveness and protect shareholder’s interests. Studies show that female directors are more likely to focus on risk management, and gender-diverse boards often outperform their peers in financial performance, including higher return on equity, higher investment efficiency and increased profitability. Women’s unique perspectives, experiences and expertise can foster more thorough discussions, better decision-making and innovative solutions to complex problems, research has found.
Moreover, many high-profile corporate scandals have been attributed in part to groupthink and a lack of diversity within homogeneous boards and senior leadership teams. These incidents have brought the issue of diversity, including gender diversity, to the forefront of corporate governance debates.
To break this vicious cycle, legal enforcement of both board diversity and climate change initiatives is crucial worldwide. Ultimately, such measures could play a pivotal role in safeguarding our planet.
Mandated vs voluntary diversity
Many countries, including Australia, Canada, Japan, the US and the UK, have established guidelines to promote gender diversity in corporate leadership. These often follow the ‘comply-or-explain’ principle. However, as there are no penalties for non-compliance, these recommendations often go unheeded.
In Norway, at least 40% of corporate board seats in publicly traded and large and medium-sized private companies must be held by women. Germany, France and Austria have now implemented similar quotas as a legal requirement.
The European Commission recently issued a directive mandating that by mid-2026, at least 40% of non-executive director positions and 33% of all board positions in large listed companies must be held by women. Spain has now legislated to achieve this.
