Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project

Abstract

This paper investigates the effect of female representation on the board of directors on corporate response to stakeholders' demands for increased public reporting about climate change-related risks. We rely on the Carbon Disclosure Project as a sustainability initiative supported by institutional investors. Greenhouse gas emissions measurement and its disclosure to investors can be thought of as a first step toward addressing climate change issues and reducing the firm's carbon footprint. Based on a sample of publicly listed Canadian firms over the period 2008-2014, we find that the likelihood of voluntary climate change disclosure increases with women percentage on boards. We also find evidence that supports critical mass theory with regard to board gender diversity. These findings reinforce initiatives being undertaken around the world to promote gender diversity in corporate governance while demonstrating board effectiveness in stakeholder management.

Women in the boardroom and their impact on climate change related disclosure

“…In order to understand the effect that women have on boards, it is important to consider not only their presence, but also their number. Given this fact, researchers (Prado-Lorenzo and Garcia-Sanchez, 2010;Lio et al, 2014;Ben-Amar, et al, 2015) have examined the effect of gender diversity on GHG emissions disclosures with mixed results. They also reveal that board gender diversity with more than two women directors influences board disclosures on GHG emission levels and climate change strategies.…”

“…Nevertheless, scholars have found a larger board to be better (Gales and Kesner, 1994;Dalton et al, 1999). In this case, the climate change risk issue could be considered by larger number of board members as their background skills (education, experience) help of understanding and evaluating a firm's social roles ( Chang et al, 2015). They can bring a wealth of knowledge and experience to the board and can also increase the element of independence and objectivity in the board's strategic decision-making (Fama and Jensen, 1983).…”

Approaches on Correlation between Board of Directors and Risk Management in Resilient Economies

“…Additionally, a directive was proposed which established that at least 40% of non-executive board positions should be held by women [36]. Also, Post et al [33] contended that a higher female representation on a board lead to the foundation of sustainability-themed alliances, whereas Ben-Amar et al [37] found an improvement of disclosure on voluntary climate change in companies showing greater women ratio on boards.…”

Does gender diversity in forest sector companies matter?

“…Increased diversity on forest sector company boards and TMTs may be a way to further develop market and customer orientation, as well as innovation (Hansen and Breede 2016). Others show that the percentage of females on boards is related to voluntary sustainability related actions, another sign of being in tune with the marketplace (Ben-Amar et al 2015).…”