Getting more women on boards can make companies greener: Research

Getting more women on boards can make companies greener: Research

Dr Chelsea Liu
Here’s yet another reason to support getting more women on boards: new research finds that companies with a better mix of men and women around the table experience fewer environmental lawsuits.

And less environmental violations by an organisation may suggest that it is more environmentally friendly.

The research by Dr Chelsea Liu, a senior business lecturer at Adelaide Business School, finds that more gender-balanced boards are better at protecting the environment, and are less likely to be sued for environmental law violations.

Dr Liu’s research examined 1893 environmental lawsuits raised against the 1500 S&P firms in the US between 2000 and 2015.

She found that those companies with more female directors had a lower rate of corporate environmental litigations.

For every single woman on a board of directors in the sample studied, the average environmental lawsuit risk exposure dropped by 1.5%, according to the study published in the Journal of Corporate Finance.

Dr Liu said the findings can be attributed to more diverse teams making better decisions.

“This can be attributed to ‘diversity theory’, which says that a group of people from more diverse backgrounds – gender, race etc. – tend to make better collective decisions, because they canvas a wider range of perspectives,” she said in a press release with the findings.

“Having a range of perspectives can result in improved corporate environmental policy, which in turn can reduce exposure to environmental lawsuits,” she said.

“Gender socialisation and ethics theories suggest that girls are brought up to be more caring towards others which can enhance environmental decision-making in the boardroom.”

Dr Liu said that the findings could strengthen the argument for board quotas in Australia, especially in the context of the business case for diversity.

“With corporate environmental responsibility becoming a more important social issue, these findings can have significant implications for policymakers, investors and managers,” she said.

“Environmental violations not only have a significant impact on societies, but they can also cause devastating losses of shareholder value.”

The percentage of women on boards at the ASX 200 is now at 27.7% according to June figures from the Australian Institute of Company directors, up from 8.3% in 2009.

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