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Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project

Abstract

This paper investigates the effect of female representation on the board of directors on corporate response to stakeholders’ demands for increased public reporting about climate change-related risks. We rely on the Carbon Disclosure Project as a sustainability initiative supported by institutional investors. Greenhouse gas emissions measurement and its disclosure to investors can be thought of as a first step toward addressing climate change issues and reducing the firm’s carbon footprint. Based on a sample of publicly listed Canadian firms over the period 2008–2014, we find that the likelihood of voluntary climate change disclosure increases with women percentage on boards. We also find evidence that supports critical mass theory with regard to board gender diversity. These findings reinforce initiatives being undertaken around the world to promote gender diversity in corporate governance while demonstrating board effectiveness in stakeholder management.

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Notes

  1. In June 2012, The United Kingdom (UK) government announced that, starting from April 2013, all companies listed on the main market of the London Stock Exchange will be required to disclose their GHG emission levels in the annual reports. In February 2010, The United States (US) Securities and Exchange Commission (SEC) issued an interpretive guidance on climate change-related risks to help US firms comply with their disclosure obligations.

  2. See Labelle et al. (2015) for a comprehensive summary of the different approaches used around the World to promote female representation on corporate boards.

  3. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/182602/bis-13-p135-women-on-boards-2013.pdf.

  4. http://www.asx.com.au/documents/asx-compliance/cg_principles_recommendations_with_2010_amendments.pdf.

  5. http://www.sec.gov/news/speech/2010/spch110410laa.htm.

  6. http://www.sec.gov/news/press/2009/2009-268.htm.

  7. US Securities and Exchange Commission, Release No. 33‐9089, Proxy Disclosure Enhancements (December 16, 2009), http://www.sec.gov/rules/final/2009/33-9089.pdf.

  8. http://laws-lois.justice.gc.ca/eng/acts/E-5.401/page-1.html#h-2.

  9. Catalyst, 2012 Catalyst Census: Financial Post 500 Women Senior Officers and Top Earners (February 19, 2013), http://www.catalyst.org/knowledge/2012‐catalyst‐census‐financial‐post‐500‐women‐senior‐officers‐and‐top‐earners. GMI Ratings, GMI Ratings’ 2013 Women on Boards Survey (May 1, 2013), http://www3.gmiratings.com/home/2013/05/gmi‐ratings‐2013‐women‐on‐boards‐survey. TD Economics, Get On Board Corporate Canada (March 7, 2013), http://www.td.com/document/PDF/economics/special/GetOnBoardCorporateCanada.pdf.

  10. The authors use the CSR ratings from the KLD database and focus on two social performance strength constructs, institutional strength (a positive measure of community and diversity issues), and technical strength (a positive measure of product, government, and employee issues).

  11. The results show a positive linear relation between gender diversity and employee productivity, a negative linear relation between age diversity and ROA, and also an inverted (U-shaped) curvilinear relationship between age diversity and ROA.

  12. Other committees include pension/investment, Executive, Risk, Finance, Conduct Review, Social Responsibility/Public Policy, and Strategy/Planning.

  13. http://iveybusinessjournal.com/topics/governance/forcing-gender-diversity-on-canadian-boards.

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Acknowledgments

We acknowledge financial support from the CPA Canada Accounting and Governance Research Centre at the University of Ottawa. We are also grateful to seminar participants at HEC Montreal for helpful comments.

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Correspondence to Philip McIlkenny.

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Ben-Amar, W., Chang, M. & McIlkenny, P. Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project. J Bus Ethics 142, 369–383 (2017). https://doi.org/10.1007/s10551-015-2759-1

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Keywords

  • Sustainability disclosure
  • Climate change
  • Greenhouse gas emissions
  • Gender diversity
  • Corporate governance
  • Board of directors