Female Board Directors Boost Sustainability Performance

by Bidita Debnath on  January 2, 2013 at 10:55 PM Research News   - G J E 4
According to a new study, the number of women on a corporate board correlates with a firm's sustainability performance.

As a corporate responsibility consultant, Kellie McElhaney publicly criticized Apple's recent appointment of another man to an already all-male executive team.
 Female Board Directors Boost Sustainability Performance
Female Board Directors Boost Sustainability Performance

"While not studied in this paper, the cases of strong ESG performance leading to improved financial and more women in leadership leading to better financial performance has been well documented," says Adj. Asst. Prof. McElhaney.

"The gap we want to fill in this study is to investigate a linage between women and ESG performance to make this scenario a win-win-win."

McElhaney found that companies with one or more women on their boards are significantly more likely to have improved sustainability practices.

"This is not a women's or men's issue, it's a collective and business opportunity," says McElhaney who is also faculty director, Center for Responsible Business at the University of California, Berkeley's Haas School of Business.

The study, "Women Create A Sustainable Future," is co-authored by Sanaz Mobasseri, PhD candidate, Berkeley-Haas Management of Organizations Group, and sponsored by KPMG and Women Corporate Directors (WCD). MSCI Inc. provided the dataset of Fortune 1500 companies and their environmental, social, and governance (ESG) performance, which they have been measuring since 1992.

To measure corporate performance, the authors reviewed each organization's ESG performance.

ESG is a widely accepted measure of corporate sustainability among the investment community as indicators of risk management, opportunity recognition, and strong leadership.

"We also found, like researchers before us, that the sweet spot is three. Companies with at least three female board members had a better ESG performance but we're talking about very few companies who meet this threshold-just three of the 1,500 we studied: Kimberly-Clark, General Motors, and Walmart," says McElhaney.

McElhaney interviewed several female directors to learn more about their personal experiences on a board.

"Women and sustainability are two sides of the same coin .... Corporations build better societies if they have balanced boards," says Halla Tomadottir, executive chair and co-founder of Audur Capital in Iceland, interviewed in the study.

Source: ANI

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