More women in boardrooms mean better climate change policy, study says

Companies with greater gender diversity in their boardrooms show better performance on developing policies and methods to address climate change risks, according to BloombergNEF.

Firms, including electric utilities and oil producers with 30% or more of director roles filled by women, typically score better on environmental disclosures, BNEF and the Sasakawa Peace Foundation said in a study published Tuesday. They are more likely to set clear climate governance strategies and show greater transparency in the release of related data, including on emissions.

The study analyzed 11,700 global companies and found that emissions growth from firms with a third of female directors was 0.6% compared with 3.5% 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 Plc 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.

Organizations including the 30% Club, which advocates for more equal gender balance in workforces and senior leadership, have long pointed to studies that show diversity helps to improve performance in all areas, not only 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, Goldman Sachs Group Inc. strategists said in October.

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,” 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.