Better gender diversity in boardrooms benefits the environment too: Report

By Rahul Vaimal, Associate Editor
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According to BloombergNEF, a research organization, businesses with greater gender diversity in their boardrooms are showing better performance in designing policies and methods to mitigate climate change risks.

BNEF and the Sasakawa Peace Foundation (Japanese private foundation) said in a report that companies, including electric utilities and oil producers, with 30 percent or more of director positions filled by women usually perform better on environmental disclosures. They are more likely to develop consistent policies for climate governance and demonstrate greater accountability in the release of relevant data, including on carbon emissions.

The study examined 11,700 global companies and found that emissions growth from firms with a third of female directors was 0.6 percent compared with 3.5 percent from those without any women on the board.

“Companies with better climate governance could utilize environmental data that is measured, verified and reported to identify emission reduction potential,” according to the report. “Climate change governance could be an important stepping stone to lower emissions in the long term.”

Major energy producers such as Royal Dutch Shell and BP Plc are examples of companies that have set more aggressive decarbonization targets than most peers and also have a higher share of women on their boards, according to the report.

For a long time, organizations like the 30% Club, which promotes more equal gender balance in employees and senior management, have turned to research that show diversity tends to boost efficiency in all areas, not just in climate governance.

Having more women in senior positions is typically associated with company outperformance relative to a sector, though that doesn’t apply to all industries and academic research isn’t yet conclusive, some strategists said earlier.

Better and more standardized disclosure of gender data could help companies and investors to assess links between diversity and business performance, Miho Kurosaki, head of Japan and Korea research at BNEF, said in a statement. “Companies should consider setting longer-term diversity goals in the same fashion that they set goals for financial performance and climate governance,” Mr. Kurosaki said.

Legislation and reporting requirements are seen to accelerate disclosure on gender diversity and climate change. European countries have made significant progress by mandating targets for female representation at corporate boards, while Asian nations have lagged on diversity disclosure and performance.