2 FOR 1 – How increasing your gender diversity balance could help reduce your emissions?
The key message that emerges from the 2021 COP26 summit is that climate change isn’t gender neutral. Women are indeed disproportionately bearing the consequences of climate change as well as the implications of unproductive environmental management. Despite some inclusive policy actions, the tremendous contribution that women could bring to the environmental decision-making remains underemployed. As the most affected, women not only are the most concerned but have also the qualities to play a leadership role in the fight against climate change.
Corporations represent one of the sectors where such leadership can fully express its potential. Given the critical contribution of developed countries' organizations to carbon emissions, our recently published study investigates whether gender diversity in the workplace could mitigate climate change by reducing carbon emissions. Using a sample of around 2,000 listed companies in 24 industrialized economies over the period 2009-2019, we find that a 1% increase in female managers within a firm is associated with a 0.5% decrease in carbon emissions. Our study also shows that, after the Paris Agreement, firms with greater gender diversity reduced their carbon emissions by about 5% more than firms with more male managers. In short, a greater female representation among managers not only permits limiting carbon emissions but further facilitates the implementation of climate-oriented policies, such as the Paris Agreement.
But how do women perform better than men as regards environmental results? Women are guided from the early years of life to be more empathic, nurturing and caring as a result of the relationship with their mothers. Such traits are thus consolidated by the division of gender roles operated by societies in which women generally take on the responsibility of raising children and caring for the household. Thus, their perception of morality and ethics permits women to develop a greater sensitivity for the environment. In corporations, this results in a greater consideration of all stakeholder’s interests as well as policies’ recommendations in matters of environmental protection, even though they might not match with financial objectives.
What differentiates our study from prior works is that we focus on female managers. The latter, differently from female directors, have wide discretion about how to reach the objectives of the board and can therefore freely and effectively instil their green values in their day-to-day work by deploying greener implementation strategies, for example. On the contrary, female directors are underrepresented on boards and, therefore, perceived as tokens by the male majority which hinder their contribution to the environmental decision-making process.
Female directors have indeed to reach a critical mass of 30% of board members to effectively impact boardroom dynamics. However, despite the considerable combination of policies and initiatives aimed at promoting board gender equality, the share of companies with more than 30% of female board members is still low, reaching only 16% in 2019. There is still much work to do, but the route is clear as demonstrated, for example, by the recent policy statement on diversity and inclusion published by the Financial Conduct Authority which requires listed companies to report and disclose information against targets on the representation of women on their boards and executive management committees.
Our study also delves into the roles played by culture, religion and institutional characteristics in facilitating or hindering the pro-environmental attitude of female managers. We find that although culture and religion do not significantly affect the ability of female managers to drive the reduction of carbon emissions, countries with a greater empowerment of women outside corporations ease the work of female managers who can achieve better environmental results in terms of reducing CO2 emissions. In detail, a hierarchical and patriarchal division of labour and power within the family as well as the countries’ dominant religious belief do not appear to play a role in the way female managers reduce carbon emissions. A greater inclusion, instead, of women within political institutions as well as civil society organizations enables female managers to better limit corporate carbon emissions.
Our results provide a new interpretative framework to the ongoing discussion on women’s engagement in the environmental decision-making process. As corporations are called upon to do their part in the fight against climate change, targeting gender equality at the managerial level could be an effective solution to limit carbon emissions and, therefore, the corporate contribution to global warming. Thus, we deem that our findings could have important implications for policymakers. In particular, we suggest that policies that envisage a larger percentage of women at the management level could not only have an impact on gender diversity imbalances but also allow for a more efficient fulfilment of the Paris Agreement recommendations. Policymakers can, therefore, “kill two birds with one stone”: a more active engagement of women in the decision-making process may help to achieve environmental objectives.
Yener Altunbaş is a Professor of Economics at Bangor Business School. His main fields of research interest include: the study of European banks, stock market analysis, corporate governance, electoral studies, regional economics and urban economics.
Alessio Reghezza is a Lecturer in Economics at the University of Genoa. His research interests cover monetary policy, macroprudential policy, financial stability and, more broadly, empirical banking.
Giulio Velliscig is an Adjunct Professor in Computer Applications in Finance at the University of Udine. His main fields of research interest include: banking regulation, bond market analysis and corporate governance.