Umeå University's logo

The past several years the environmental pressure on companies have increased. Both regarding their impact on the external environment, and on the internal environment. The question of gender diversity in the workplace has been a hot topic for decades. Women have historically always been underrepresented in the boardroom, with men traditionally assuming high governing positions. As more women have assumed a place on the board of directors, factors such as the transparency has increased. Raising the question on whether the increased number of women within decision-making position shas something to do with achieving higher ESG scores. 

The purpose of the study is to investigate if there is a relationship between the proportion of women on the board of directors and the ESG scores of listed companies in Europe. Moreover, also study whether the critical ratio of three or more women on the board have any significant effect on the score. The companies included in the study has had at least one ESG score between 2018 – 2022. Four research questions lay ground for four hypotheses, each intended to investigate the relationship between ESG and women on the board of directors. 

What was found was a highly significant relationship between the % of women on the board of directors and the ESG score. Breaking it down, all three pillars are highly affected by the ratio of women. The most affected, however, is the governance pillar due to the relationship with board diversity, and transparency towards investors and other stakeholders. These results are supported by previous studies studying the same phenomenon. A significant relationship was also found between the % of women and the ESGC score, meaning the ESG score including possible controversies the company is, or has been, involved in. The difference in effect between the effect on ESG- and ESGC score is not significant, however. Meaning there is nothing saying that women have an increased effect on keeping companies out of scandals involving ESG factors. Moreover, the critical ratio theory is supported by this study. With companies with three or more women on their board of directors scoring significantly higher ESG score than those without. 

A conclusion of this study is hence that having more women on the board of directors can increase the work towards ESG matters, and thus also the ESG score due to several different reasons. This further supports the inclusion of gender quotas within companies and institutions.