Board gender diversity, ESG controversies and circular economy disclosure. An analysis on European listed companies

Purpose This study examines the impact of board gender diversity (BGD) on financial performance (FP) and environmental, social and governance (ESG) disclosures, as well as the impact of ESG disclosures on FP. Furthermore, this study investigates the moderating role of ESG disclosures in the relationship between BGD and FP. Design/methodology/approach The sample included data on 60 nonfinancial companies listed on the Abu Dhabi Securities Exchange and the Dubai Financial Market from 2012 to 2021. Data were collected from a Bloomberg Terminal. Dynamic panel data regression was used to study the impact of BGD and ESG on FP. Findings During the voluntary ESG reporting period, the impacts of ENV and GOV on FP were significant, whereas that of ESG was not. BGD improves the FP of listed nonfinancial companies when mandatory ESG disclosure is required. However, this relationship was negatively moderated by ESG during adherence to these requirements. Research limitations/implications It is recommended that nonfinancial companies listed in the United Arab Emirates (UAE) practice a more favorable mechanism to enhance BGD when their ESG scores become weaker. Improving BGD practices for nonfinance companies with strong or increasing ESG scores will not be effective as it may reduce the strength of the existing association between BGD and FP. Practical implications It is recommended that nonfinancial companies listed in the UAE practice a more favorable mechanism to enhance BGD when their ESG scores become weaker. Consequently, such companies can improve FP in terms of an increased market value of shares (Tobin’s Q) when their ESG scores decrease. However, improving BGD practices for nonfinance companies with strong or increasing ESG scores will not be effective because it may reduce the strength of the existing association between BGD and FP. Originality/value To the best of the authors’ knowledge, this is the first study to find a negative moderating role of ESG in the relationship between BGD and FP, particularly during mandatory ESG reporting requirements.

This paper explores whether a board's gender diversity influences the voluntary formation of its board subcommittees. Female board directorship may become a business strategy for firms if it affects the appointment of board subcommittees. We hypothesize that the voluntary creation of board subcommittees is affected by the presence of female directors on boards; the presence of independent, executive, and institutional female directors; and the proportion of shares held by female directors on boards. Board gender diversity has been measured as a proportion and with Blau's index. The results show that independent female directors are positively associated with the likelihood of voluntarily setting up all or some of the committees and a supervision and control committee. The presence of executive female directors negatively influences the probability of forming all or some of the committees, an executive committee and a supervision and control committee. The percentage of shares held by female directors has a positive effect on the voluntary creation of an executive committee. The findings also report that women directors and institutional female directors do not contribute to the voluntary creation of board subcommittees. Our evidence shows that female board directorship impacts the demand of internal control mechanisms such as board subcommittees, suggesting that firms should take it into account as a business strategy. The main implications derived from this research are relevant for Spanish policymakers and researchers because board gender diversity may play a significant role in the decision‐making processes of firms and may influence firms' outcomes.

Purpose This study examines the mediating role of board gender diversity in the relationship between environmental, social and governance (ESG) performance and bank risk-taking within the Gulf Cooperation Council (GCC) region. It aims to assess whether inclusive leadership enhances the effectiveness of ESG initiatives in promoting financial stability across Islamic and conventional banking systems. Design/methodology/approach Using a panel dataset of 56 GCC banks from 2015 to 2022, the research applies the Baron and Kenny (1986) mediation framework, alongside generalized method of moments (GMM) regressions and structural equation modeling (SEM). The analysis examines ESG scores, gender diversity metrics, and risk indicators (Z-scores and credit risk), controlling for firm-specific and macroeconomic factors. Findings The results show that strong ESG performance significantly lowers both insolvency and credit risk. Additionally, ESG engagement correlates positively with board gender diversity, and gender-diverse boards are linked to reduced risk-taking and partially mediate the ESG-risk relationship. This pattern holds for both Islamic and conventional banks. Practical implications The findings support policy reforms that integrate ESG and promote gender diversity in banking governance, thereby reducing risk exposure and improving financial resilience. Social implications By emphasizing women's leadership, this research aligns with broader societal goals of equity and inclusion, and shows how sustainability and diversity initiatives can foster inclusive governance cultures in the GCC region. Originality/value This study provides unique empirical insights from a region with distinct institutional and cultural contexts. It positions board gender diversity as a functional governance mechanism that effectively translates ESG commitments into risk mitigation strategies, enriching the theoretical discourse on ESG and inclusive leadership.

PurposeGender diversity in corporate boards is broadly studied in existing corporate governance literature. However, the role of board gender diversity on environmental, social and governance (ESG) performance of the banks is still unaccounted for. Drawing on resource dependence and legitimacy theory, this study addresses this pressing research issue. Moreover, investigation of ESG controversies as a moderator paves the existing corporate governance research to the new avenues.Design/methodology/approachData were sourced from Refinitiv database on 37 US banks from the period of 2013 to 2017. This study employs static and dynamic panel regression models that include random effects, fixed effects and dynamic generalised method of moments (GMMs) to test the hypotheses. Furthermore, system GMM is used to reduce the issue of endogeneity, measurement error, omitted variables bias and bank-specific heterogeneity.FindingsWe identify a significant positive relationship between board gender diversity and the ESG performance of US banks. However, the result propounds non-significant moderating effect of ESG controversies on the board gender diversity–ESG performance nexus.Originality/valueLiterature on board gender diversity and ESG separately and predominantly explains firm/bank's financial performance. This study is one of the pioneering attempts to explain the role of board gender diversity on ESG performance. Although incremental, however, this study also contributes to the literature on ESG in the US context.

PurposeThis study aims to investigate the relationship between board gender diversity and environmental, social and governance (ESG) controversies and to determine if a critical mass of female directors has a significant impact on ESG performance.Design/methodology/approachThe study analyzes a sample of non-financial companies from 13 European countries between 2004 and 2021. The primary method used to reach conclusions was the pooled ordinary least squares regression. Additionally, the study used supplementary techniques such as alternative measurement, sub-sample analysis and two-stage least squares to enhance its reliability.FindingsThe results indicate that a higher representation of women on boards is correlated with a reduction in the number of ESG controversies, particularly when there are three or more female directors. Furthermore, the relationship between board gender diversity and ESG controversies may be affected by factors such as industry, governance and a company’s environmental performance.Practical implicationsThis study suggests that increasing women’s representation on boards may mitigate ESG controversies and improve firm reputation and performance, especially in industries with high ESG risks. Policymakers can support this through policies, targets, training and inclusive practices. The findings also inform investors and stakeholders of the relationship between board gender diversity and ESG controversies.Originality/valueThis study expands the understanding of the relationship between board gender diversity and sustainable accounting and finance. It focuses on the effect that having female board members has on corporate policies, which is significant for shaping global policies that promote diversity on boards.

The purpose of this research is to examine the association between corporate governance mechanisms (board independence, board gender diversity, Chief Executive Officer (CEO) duality, and environmental, social and governance (ESG) linked compensation) and wastewater recycling as a strategy for managing the flow of microplastics into the aquatic environment. The study analysed an international sample of top companies on the Forbes 500 list over a 15-year period during the millennium development goals (MDGs) and sustainable development goals (SDGs) eras. Multiple regression analysis with fixed effect OLS, two-stage least squares regression, propensity score matching, and logistic regression were applied in the data analysis. The results show that, at the aggregate level, board gender diversity is positively associated with wastewater recycling, whilst CEO duality has a significant negative impact. When disaggregated into industries, board gender diversity is positively associated with wastewater recycling in high-polluting and low-polluting industries. In relation to the MDGs/SDGs eras, the impact of board gender diversity is more significant in the MDGs era than in the SDGs era. At the geographical region level, CEO duality has a significant negative impact on wastewater management in the America and Asia Pacific regions, whilst the effect of CEO duality is significantly positive in the Western Europe region. We also find that a minimum of two female directors is required to improve wastewater management practice. The study concludes that whilst board gender diversity is a notable driver of wastewater management, CEO duality diminishes the commitment of multinational entities (MNEs) to addressing wastewater management issues. Our result is robust to (i) alternative measures of wastewater management, (ii) alternate sample composition, (iii) alternate method of data analysis, and (iv) endogeneity checks. The study contributes to the limited literature on waste management and the circular economy, particularly governance mechanisms’ role in wastewater management in an international context.

PurposeThis study aims to investigate the effects of board cultural diversity (BCD) and board gender diversity (BGD) of the board of directors on environmental, social and governance (ESG) performance in the European banking sector using resource-based view (RBV) theory. In addition, this study analyses the linkages between BCD and BGD and knowledge sharing on the board of directors to improve ESG performance.Design/methodology/approachThis study selected a sample of European-listed banks covering the period 2021. ESG and diversity variables were collected from Refinitiv Eikon and analysed using the ordinary least squares model. This study was conducted in the European context regulated by Directive 95/2014/EU, which requires sustainability disclosure. The original population was represented by 250 banks; after missing data were excluded, the final sample comprised 96 European-listed banks.FindingsThe findings highlight the positive linkages between BGD, BCD and ESG scores in the European banking sector. In addition, the findings highlight that diversity contributes to knowledge sharing by improving ESG performance in a regulated sector. Nonetheless, the combined effect of BGD and BCD negatively impacts ESG performance.Originality/valueTo the best of the authors’ knowledge, this is the first study to measure and analyse a regulated sector, such as banking, and the relationship between cultural and gender diversity for sharing knowledge under the RBV theory lens in the ESG framework.

PurposeThis paper aims to investigate the question concerning whether gender diversity in the boardroom matters to lenders or not?Design/methodology/approachTo answer this question, the authors use the data from 2009 to 2015 of all A-share listed companies on the Shanghai and Shenzhen stock exchanges. The authors use ordinary least squares regression and firm fixed effect regression to draw our inferences. To check and control the issue of endogeneity the authors use one-year lagged gender diversity regression, two-stage least squares regression, propensity score matching method and Heckman two-stage regression.FindingsThe results suggest that the presence of female directors on the board reduces managerial opportunistic behavior and information asymmetry and, consequently, creditors’ perceptions about the probability of loan default and the cost of debt. The authors find that lenders charge 4 per cent less from borrowers that have at least one female board member than they do from borrowers with no female board members. The authors also find that the board structure (i.e. gender diversity) of government-owned firms also matters to lenders, as government-owned firms that have gender-diverse boards have a lower cost of debt (i.e. 5 per cent lower interest rate).Practical ImplicationsThe findings have implications for individual borrowers and for regulators. For example, borrowers can get debt financing at lower rates by altering their boards’ composition (i.e. through gender diversity). From the regulatory perspective, the results support recent legislative initiatives around the world regarding female directors’ representation on boards.Originality ValueThis paper makes several contributions. First, beyond the recent studies on boardroom gender, the authors investigate the relationship between gender diversity in the boardroom and the cost of debt. Second, the authors extend the literature on the association between government ownership and cost of debt by first time providing evidence that the board composition (e.g. gender diversity) of government-owned firms also matters to the lenders. The other contributions are discussed in the introduction section.

This study investigates the impact of ESG (Environmental, Social, and Governance) controversies on the cost of debt, with a focus on the moderating roles of ESG performance, board independence, and board gender diversity. Using a sample of non-financial public companies listed on the ASEAN-5 stock exchanges from 2019 to 2023, the research explores how ESG controversies influence borrowing costs and the potential moderating effects of corporate governance mechanisms. The findings reveal that ESG controversies lead to an increase in the cost of debt, confirming the negative financial implications of such controversies. Among the corporate governance variables, only board independence is found to mitigate the relationship between ESG controversies and the cost of debt. Additionally, the results from robustness tests indicate that both board independence and gender diversity help lessen the effect of ESG controversies on debt costs. However, the moderating effect of ESG performance on the relationship between ESG controversy and the cost of debt is not supported. These findings suggest that while ESG controversies are costly for firms, strong governance practices—particularly in terms of board independence and diversity—can help reduce these financial penalties. The study contributes to the literature on corporate governance and ESG by highlighting the role of board structures in mitigating the financial costs of ESG risks.

Purpose This paper aims to study how corporate governance and country-related contextual factors affect the relationship between board gender diversity and environmental, social and governance (ESG) disclosure in its components: governance, social and environmental. Design/methodology/approach Using ordinary least-squares and two-stage least squares (2SLS) regressions, and retrieving ESG disclosure data from Bloomberg’s database, the paper analyses a sample of European nonfinancial listed firms (1,935 firm-year observations) over the period 2014–2022. The study adopts board independence and board cultural diversity as structural and demographic board attributes that characterize the corporate governance environment in which female directors operate; the enforcement of law and gender equality as country-related institutional and cultural factors. Findings Results suggest that female directors may substitute board independence in improving ESG and governance disclosure, whilst they co-occur with board cultural diversity in increasing ESG, governance and social disclosure. Findings indicate that the enforcement of law increases the positive effect of female directors on environmental disclosure and lowers the impact on governance disclosure. Conversely, a more gender-equal environment enhances female directors’ engagement in improving governance disclosure, reducing their beneficial effect on environmental information. Originality/value This study contributes to the literature suggesting that structural and other demographic board contextual aspects, as well as institutional and cultural country-related contextual factors, affect the relationship between board gender diversity and ESG disclosure differently and the effect may vary depending on ESG disclosure.

This paper examines the influence of board gender diversity on the Environmental, Social and Governance (ESG) disclosure quality of energy firms. Particularly, the study evaluates the possible differences in the influence of board gender diversity on the ESG disclosure practice of firms in developed and developing nations. Previous studies have used single country based analysis and presented diverse results, however this study uses data from 48 countries from both developed and developing nations over a period of 13 years (from year 2004 to 2016). The study finds that, in general, female directors favorably influence the quality of disclosure of ESG and its individual components (except governance). However, sub‐sample analysis of firms in developed and developing nations finds that the relationships are significant only for the sample of firms in developed nations. The results show that there are differences in the role female directors play in influencing ESG disclosure for developed and developing countries, thus this study highlights the importance of accounting standards in strengthening the contribution of female directors on corporate boards, especially in developing countries. The study also highlights the need to assess ESG components separately, in addition to the overall component, when conducting studies on ESG.

Purpose This study aims to examine the impact of board gender diversity (BGD) and sustainability committees (SC) on environmental, social and governance (ESG) controversies, aiming to assess the effectiveness of these governance mechanisms in mitigating ESG risks. Design/methodology/approach The study used panel data from 2,812 nonfinancial US publicly listed firms between 2018 and 2023. To ensure robust results, various estimation techniques were used, including alternative measures, the Heckman two-stage model to address potential self-selection bias and the two-stage least squares method to tackle endogeneity concerns. Findings The results indicate that both BGD and SC negatively and significantly impact ESG controversies. Firms with greater gender diversity on their boards and established SC are less likely to face ESG controversies. In addition, the study found that the interaction effects of BGD and SC are more effective in reducing ESG controversies than either mechanism alone. Practical implications Firms that prioritize gender diversity on their boards and have active SCs manage ESG risks more effectively. Investors should consider these factors when evaluating potential investments, as such firms are likely to offer better long-term performance and stability. By focusing on firms with strong ESG practices, investors can mitigate risks associated with ESG controversies and enhance the overall resilience of their investment portfolios. Social implications By highlighting the role of gender-diverse boards and SC in mitigating ESG controversies, this study supports broader societal goals of gender equality and responsible business conduct. This aligns with sustainable development goal (SDG) 5 (gender equality) by advocating for increased female representation in leadership roles and SDG 12 (responsible consumption and production) by encouraging sustainable practices in business operations. Originality/value This study provides new insights into the effects of BGD and SC on ESG controversies, offering valuable guidance for policymakers and business leaders seeking to enhance corporate governance and sustainability.

The purpose of this paper is to investigate the relationship between gender diversity and environmental, social and governance (ESG) performance in the Italian utilities sector. The study examines whether the presence of women on the board of directors (BoD) is related to ESG dimensions. We analyzed a sample of 482 utility companies for the period 2018-2022 and we developed an econometric model applying unbalanced panel regression data with firm fixed effects and controls per year. Within a multivariate regression model, the authors considered the ESG score provided by Refinitiv Eikon to test the research hypotheses. Findings show that the presence of women on board of directors improves ESG performance when a critical mass of female board members (at least three) is reached. A critical threshold of female directors also positively influences the scoring of environmental and social pillars. From a managerial perspective this study draws attention to BoD composition encouraging utility companies to define internal corporate governance mechanisms thoroughly. The overall findings support managers, policy makers and regulators on how to improve ESG performance through gender diversity on BoD. This paper offers an in-depth examination of the ESG practices of utility firms, and it attempts to bridge the gap in prior literature on the determinants of ESG performance in the Italian utilities sector. This study is the first that investigates the relationship between board gender diversity and ESG performance in such a context exploring how a critical mass of women on BoD affects ESG dimensions.

The objective of this paper is to demonstrate how gender diversity can be considered an indicator of sustainability in the Board of Directors. The growing attention to multicultural, social, and environmental aspects has, in fact, underlined the need to make a change of direction with respect to the typically male composition of the Board. To date, it is possible to deduce this common effort from the numerous tools that are made available to companies in terms of specific indicators and metrics. The main ones include, for example, the GRI 405 issued by the Global Sustainability Standards Board (GSSB), the SDG 5 issued by the United Nations in the 2030 Agenda, and finally the Gender Equality Index issued by the European Institute for Gender Equality (EIGE). As is evident, the right evaluation tools would not seem to be lacking, but on the contrary, we cannot say the same for the actual desire to focus the attention on gender equality at every employment level. Although, in fact, the female employment trend is constantly growing but, in our opinion, this is still insufficient especially in the top positions. Therefore, the problem that arises, in consideration of what has been found in the literature and also in practice, is to actually understand how much the concept of gender equality is really applied (García‐Sánchez et al., 2022). In this scenario, speaking with reference to the Italian panorama, the concepts highlighted find confirmation in the facts. After having reconstructed the literature background and having outlined the political and regulatory context, referred to female employment, we conducted a study based on empirical data of the top twenty Italian listed companies; collecting and analyzing some data, included the ESG (Environmental, Social and Governance) policies described in the strategic plans, it was possible to draw up a reference framework on the relationship between the ESG policies and the presence of female directors in key roles (such as the president of the board of directors and the chief executive officer). Thanks to the statistical analysis, it was doable, by bringing objective data, to emphasize the debate, already present in the literature, on female employment in top positions. Despite the numerous limitations of our research, such as the fact of not being able to generalize the conclusions to the whole Italian reality, but rather exclusively to the analyzed sample, we are certain that this research can constitute a first step, with respect to a broader and certainly more complete study, on the path that unites sustainability and ethics in the composition of the Board of Directors.

This study focused to understand the impact of the social pillar of ESG (Environmental, Social, and Governance) practices on the sustainability of organizations. A systematic review of the literature was carried out and the analysis of these articles revealed that in recent years investors have shown a growing interest in ESG, guided by financial value. ESG data, scientifically grounded and focused on investments, offers greater transparency to investors, but faces challenges in defining metrics due to the distinct nature of the three pillars. Companies with better ESG performance also contribute to community development. However, the social dimension of ESG has received less attention than the environmental and economic dimensions. Human-centric organizations that use ESG practices make an impact on the environment by implementing sustainable measures that reduce health risks and workload. In the social sphere, labor management, diversity and inclusion programs increase satisfaction and productivity at work. In corporate governance, improved strategies should consider employees' occupational stress and gender diversity in senior management and boards, as it plays a key role in ESG disclosure and performance. There are gaps in the literature regarding the three ESG pillars, especially regarding the social dimension and diversities. The lack of academic consensus on the impact of engaging in ESG practices indicates the need for more studies and empirical research to advance knowledge about ESG and sustainability in organizations. Overcoming these limitations can allow for a better understanding and effective implementation of ESG practices, boosting organizational sustainability.