There’s a correlation between female leadership and ESG transparency, study finds

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Companies with more women on the boards have better climate policies and increased transparency compared to their male-led peers. 

According to a study led by BloombergNEF and the Sasakawa Peace Foundation, there is a correlation between gender diversity, climate performance and innovation in business. 

READ: Legal & General issues ultimatum for FTSE 100 companies to diversify boards 

An analysis of 11,700 companies globally showed that if a third of the board are women, firms are likely to outperform in addressing environmental, governance and sustainability (ESG) issues. 

It’s good news for those firms who took steps to diversify: in fact, the number of companies with more than 30% women on the board of directors has increased eightfold in just over a decade, from 2% in 2009 to 16% today. 

There may be more change around the corner as new laws and reporting requirements are getting stricter in promoting diversity and sustainability. 

Looking at specific sectors, the study highlighted that integrated oil companies seeking to decarbonise their portfolios and digitalise operations have higher female representation on the board.  

For example, at Royal Dutch Shell PLC (LON:RDSA) 25-30% of leaders are women, including chief financial officer Jessica Uhl, compared to a global average of 10.8% for the oil and gas sector. 

Its mission to promote gender diversity started in 1997 with mentoring and career-building programmes, as well as plans to hire more women at all levels. 

The FTSE 100 firm is also focusing on green initiatives, having set a 65% emissions reduction target by 2050. 

“The ongoing climate crisis is an urgent challenge for humanity. Corporations and investors from across the world are stepping up their efforts to tackle climate change and lead the way toward a greener future,” the study said. 

“While progress is being made, most businesses have faltered in deploying the full potential of human capital by failing to embrace gender diversity.” 

“A gender-diverse workforce will bring in more experiences, knowledge, and skills to the table. As diverse teams consider issues from multiple perspectives, they are likely to emerge with solutions that all stakeholders of society find acceptable. They are less prone to engage in groupthink and make better decisions by keeping long-term implications in view.” 

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