Business Strategy and the Environment, 2025; 34:5075–5094
https://doi.org/10.1002/bse.4241

5075

Business Strategy and the Environment

RESEARCH ARTICLE OPEN ACCESS

Gender Diversity Leadership and ESG Performance: The 
Influence of Women on Boards and in Management
Davide Sandretto1,2   |  Alessandro Rizzi1  |  Gabriella Esposito1

1Department of Management, University of Turin, Torino, Italy  |  2School of Accounting and Finance, University of Vaasa, Vaasa, Finland

Correspondence: Davide Sandretto (davide.sandretto@unito.it)

Received: 20 March 2024  |  Revised: 10 February 2025  |  Accepted: 26 February 2025

Funding: Open access publishing provided by Università degli Studi di Torino, as part of the Wiley-CRUI-CARE agreement.

Keywords: board of directors | ESG performance | gender diversity | women managers

ABSTRACT
In recent years, there has been a growing interest among companies and regulatory bodies in adhering to environmental, social, 
and governance (ESG) standards, alongside an increased involvement of women in organizational decision-making processes. 
In this study, we investigate the potential advantages of female representation in leadership positions on the firms' ESG perfor-
mance. Using a dataset comprising 2646 public companies across Europe, America, and Asia from 2013 to 2022, we find a sig-
nificant positive correlation between gender diversity and companies' sustainability performance. However, a granular analysis 
of the three pillars (environment, social, and governance) reveals nuanced results. Specifically, board gender diversity is only 
positively related to the governance score, but females in managerial positions are associated with higher social scores. These 
findings consistently hold after conducting a series of robustness tests to address endogeneity concerns. Our study provides prac-
tical implications for policymakers and practitioners, advocating for greater engagement of women in leadership roles.
JEL Classification: G30, G34, Q54

1   |   Introduction

The promotion of gender diversity within the corporate context 
has become central nowadays (Ahmed et al. 2017). As outlined 
by Point 5 of the United Nations (UN) Agenda 2030, institu-
tions have the responsibility of “ensuring full and effective fe-
male participation and equal opportunities for leadership at all 
decision-making levels in the political, economic, and public 
life” (United Nations Organisation  2015). Recently, national 
and international regulators have shown a growing interest in 
this topic. Norway emerged as a forerunner in this regard, hav-
ing enacted a pioneering law mandating companies to ensure 
a minimum quota of women on their board of directors (BoDs) 
(Seierstad and Opsahl 2011). In 2005, the Nordic country intro-
duced a requirement for publicly listed companies to achieve a 
gender balance of at least 40% on their boards, setting a note-
worthy precedent for other countries. Afterwards, in 2011, both 

France and Italy enacted legislation aimed at enhancing female 
representation on corporate boards. France adopted a phased 
approach, requiring 20% female representation on the boards of 
publicly listed companies by 2014 and 40% by 2017. This man-
date is also extended to unlisted entities with over 500 employ-
ees and revenues or total assets exceeding 50 million euros for 
three consecutive years (Law No. 103/2011 2011). Italy, on the 
other hand, took a comparatively moderate stance, mandating 
a women's quota of 1/5 for the initial board renewal and 1/3 for 
subsequent mandates (Law No. 120/2011 2011). More recently, 
the European Union required that from 2026 onwards, large 
companies—defined as those with over 250 employees—must 
allocate 40% of directorial positions to non-executive members 
and 33% to women (Directive No. 2022/2381 2022). However, in 
other parts of the world, such as Asia or America, gender quotas 
have not elicited substantial interest from national authorities 
(Konigsburg and Thorne 2022).

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is 

properly cited.

© 2025 The Author(s). Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd.

https://doi.org/10.1002/bse.4241
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5076 Business Strategy and the Environment, 2025

The growing interest in gender diversity aligns with the rising 
concerns regarding climate and social sustainability issues. 
The Sustainable Development Goals (SDGs) delineated in the 
UN Agenda 2030, also address environmental, social, and 
governance (ESG) themes, encouraging companies to move 
beyond purely financial objectives. Specifically, the agenda 
advocates for firms to adopt proactive strategies, means, and 
efforts to efficiently meet the outlined targets and tackle these 
challenges.

In recent decades, academic research has extensively explored 
how attributes, particularly gender diversity, can impact or-
ganizational dynamics and outcomes. Brahma, Nwafor, and 
Boateng (2021), through a study of UK companies from 2005 to 
2016, identified a positive correlation between gender diversity 
and improved financial performance. Liu, Wei, and Xie (2014), 
analyzing Chinese companies from 1999 to 2011, pointed out 
that female executives have a stronger positive effect on firm 
performance than female independent directors, indicating that 
the executive role has a greater influence than the monitoring 
one. Conversely, Adams and Ferreira (2009) found a negative re-
lationship between board gender diversity and corporate perfor-
mance in US companies, addressing endogeneity issues arising 
between the two variables. They argued that the negative effects 
on shareholder value are looked for companies with strong gov-
ernance as a result of female over-monitoring phenomena, but 
for those with weaker governance, they found a positive asso-
ciation with performance. On the managerial front, Dezsö and 
Ross (2012) contend that the presence of females in top manage-
ment brings about social diversity benefits, thereby enhancing 
the behaviors of both managers and women in middle manage-
ment, leading to improved profitability. Similarly, Ferrary and 
Déo  (2023) found a positive effect of women in middle man-
agement and staff levels on firm performance. Moreover, other 
studies have examined the relationship between gender diversity 
and various other financial metrics, including earnings quality 
(García-Sánchez, Ferrero, and Meca 2017), stock market liquid-
ity (Loukil, Yousfi, and Yerbanga 2019), corporate debt structure 
choice (Datta, Doan, and Toscano 2021), and firm risk (Bruna 
et al. 2019; Lenard et al. 2014; Safiullah et al. 2022).

A growing body of literature has recently started to explore the 
potential nexus between gender diversity and sustainability 
companies' performance (Cambrea, Paolone, and Cucari 2023; 
Cucari, Esposito Falco, and Orlando  2018; Khatri  2023; 
Mehmood, Luca, and Quach 2023; Provasi and Harasheh 2021). 
According to several theories such as agency theory (Jensen and 
Meckling 1976), gender social role theory (Eagly 1987), resource 
dependency theory (Pfeffer and Salancik 1978), and human cap-
ital theory (Becker  1964), women contribute a distinct range 
of educational backgrounds, skills, and experiences to both 
board and management roles. Additionally, they often exhibit 
a stronger commitment to ethical conduct, social welfare, and 
environmental awareness (Khatri 2023; Liu, Wei, and Xie 2014; 
Safiullah et  al.  2022). Drawing upon these theoretical frame-
works, this study examines the connection between gender di-
versity at both board and management levels, considering the 
different dimensions of the ESG firms' performance. In order 
to perform our analysis, we download from the Refinitiv Eikon 
database information about 2646 registered public companies 
from Europe, America, and Asia from 2013 to 2022. The period 

under analysis is the aftermath of the European debt crisis and 
the Rio de Janeiro conference in 2012, where the members of the 
UN decided to start the process of developing the SDGs.

The study's contributions address pivotal gaps and provide in-
teresting implications for academics and practitioners. Using 
one of the largest samples ever employed of almost 10,000 
firms observations, we present a novel international perspec-
tive, in contrast to the prevailing focus in the current literature, 
which has only examined specific sector or nation, yielding 
mixed results (Cucari, Esposito Falco, and Orlando 2018; Khan 
and Vieito  2013; Manita et  al.  2018; Mehmood, Luca, and 
Quach 2023; Tauringana et al. 2017). In addition, we rigorously 
address potential endogeneity arising from reverse causal-
ity and short panel bias issues through a battery of robustness 
tests (Adams and Ferreira 2009; Flannery and Hankins 2013). 
To the best of our knowledge, we explore for the first time the 
potential influence of females at all managerial levels on ESG 
performance, considering their impact through the execution of 
corporate strategy (Hemingway and Maclagan 2004). Moreover, 
we contribute to the literature by conducting a detailed analysis 
of the ESG pillars in order to assess which aspects of sustainabil-
ity are most influenced by gender diversity and identify those 
that drive the aggregate score.

The results of our fixed effects regression reveal a positive and 
significant relationship between both women on the board and 
in managerial roles and ESG performance. However, when we 
break down the ESG factor into its three pillars, the fixed effects 
models indicate that gender board diversity is solely related to 
the governance score, whereas gender managerial diversity is 
only associated with the social score. Finally, we employ several 
models to mitigate the endogeneity issues arising from the struc-
ture of board characteristics (Liu, Wei, and Xie  2014; Usman 
et al. 2018). Our findings show that the positive and statistically 
significant relationship of board gender diversity persists, but 
the correlation between female managers and ESG performance 
loses its significance, even though its effect on the social score 
pillar holds.

These findings encounter both practitioners' and academics' in-
terest as they enrich the current body of literature by presenting 
an international perspective on the link between gender diver-
sity and sustainability performance. In addition, our results 
provide valuable insights for policymakers, assisting them in 
making informed decisions regarding the implementation of 
new laws concerning gender quotas within corporate boards.

The remainder of the paper is as follows. Section  2 discusses 
the literature and the development of our research hypothesis. 
Section  3 outlines the methodological approach adopted and 
the dataset. Section  4 presents the results. Section  5 includes 
robustness checks, and Section 6 describes the discussions and 
conclusions.

2   |   Literature Review and Hypothesis 
Development

The relationship between gender diversity and sustainable per-
formance is supported by various theoretical frameworks, each 

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5077

shedding light on different aspects of this dynamic. One prom-
inent framework that contributes to our understanding is the 
agency theory, conceptualized by Jensen and Meckling (1976). 
This theory delves into the company dynamics between the 
principal (shareholders) and the agent (managers), highlighting 
potential challenges arising when their objectives diverge. This 
phenomenon primarily stems from information asymmetry that 
favors the agent (Ortas et al. 2015). Agency theory underscores 
the importance of monitoring corporate objectives by the board 
of directors to mitigate the risk of conflicts of interest. Indeed, 
adopting a guideline and efficient monitoring as a division of 
decision-making allows the objectives of both to be aligned 
(Fama and Jensen 1983). Gender diversity plays a significant role 
in this context on the one hand to increase monitoring (Adams 
and Ferreira 2009; Adams, Nowland, and Grey 2011) and on the 
other hand to enhance corporate performance (Carter, Simkins, 
and Simpson 2003; Adams and Ferreira 2009; Adams, Nowland, 
and Grey 2011). According to Jensen and Meckling (1976), a di-
verse board of directors with a significant number of indepen-
dent directors allows for better monitoring of agent decisions, 
a reduction of agency costs, and better management of aspects 
related to sustainable development by providing new insights 
(Galbreath 2010).

Another theory that justifies the influence of gender on cor-
porate dynamics is the gender social role theory (Eagly 1987). 
This theory delves into the attributes and social roles associated 
with gender, drawing distinctions in the behavioral tenden-
cies of men and women. Eagly (1987) emphasizes the assertive 
and aggressive nature of men, in contrast to the more gen-
tle and flexible tendencies observed in women. As confirmed 
by literature, women focus especially on environmental is-
sues (Liu  2018; Nadeem et  al.  2020) and have a greater focus 
on social welfare (Atif et  al.  2021; Burkhardt, Nguyen, and 
Poincelot  2020; Krishnan and Parsons  2007). The presence of 
women in BoDs allows a decrease in legal disputes related to 
environmental regulations (Liu 2018), an increased orientation 
towards environmental innovation (Nadeem et  al.  2020), and 
greater attention towards climate change (Ben-Amar, Chang, 
and McIlkenny 2015). This context underscores the importance 
of gender diversity in a company's BoD for achieving positive 
business outcomes. It fosters a collaborative environment where 
diverse perspectives, expertise, and visions are shared, lead-
ing to more creative discussions and effective decision-making 
processes (Certo and Semadeni 2006; Heavey and Simsek 2013; 
Talke, Salomo, and Rost 2010).

To ensure effective decision-making within the organizational 
structure, it is essential to have access to diverse perspectives 
and information, which can be enriched by gender diversity 
(Levi, Li, and Zhang 2014). Additionally, women often excel in 
effectively communicating social and environmental initiatives 
to stakeholders, thereby promoting sustainable development 
(Pucheta-Martínez, Gallego-Alvarez, and Bel-Oms 2021).

The skills of female leaders are valuable to companies. 
According to resource dependency theory, which posits that ac-
cess to resources is critical to organizational success (Pfeffer and 
Salancik 1978), women contribute a distinct set of competencies 
to both BoDs and management, potentially influencing corpo-
rate performance (Kyaw, Olugbode, and Petracci 2017; Manita 

et al. 2018). Each BoD member's expertise is essential for strate-
gic decision-making, and gender diversity adds value by incor-
porating varied perspectives that address stakeholders' needs 
(Hillman and Dalziel 2003). As noted by Kyaw, Olugbode, and 
Petracci  (2017), women often make strategic decisions aligned 
with the company's ESG profile, potentially enhancing finan-
cial performance (Husted and Sousa-Filho  2019). Moreover, 
research suggests that women tend to prioritize stakeholder 
relations and environmental and social issues more than their 
male counterparts (Hollindale et  al.  2019; Huse, Nielsen, and 
Hagen 2009; Disli, Yilmaz, and Mohamed 2022).

Gender diversity on BoDs is therefore crucial, as it helps secure 
essential resources for the company's success (Bear, Rahman, 
and Post  2010; Nadeem, Suleman, and Ahmed  2019). Diverse 
BoDs foster a collaborative environment where members' differ-
ing experiences and perspectives lead to more comprehensive 
decision-making. Human capital theory further underscores the 
role of women in contributing to ESG performance by highlight-
ing how education, skills, and experience enhance both individ-
ual and organizational productivity (Becker 1964).

However, challenges persist. Internal conflicts may arise, par-
ticularly when male administrators resist granting women op-
portunities for training, development, or promotion, often due 
to perceptions that women lack the necessary human capital for 
board roles (Oakley 2000; Davidson and Burke 2000). Despite 
this, evidence shows that a substantial percentage of women 
hold university degrees or MBAs, particularly in Europe and 
the United States (Singh, Terjesen, and Vinnicombe  2008; 
Davies  2011), and their presence on BoDs positively impacts 
company performance (Smith, Smith, and Verner  2006). 
This supports the view that women's contributions not only 
strengthen human capital but also enhance corporate value 
(Brahma, Nwafor, and Boateng 2021).

Empirically, there has been notable growth in the literature in 
recent years. Altunbas et al. (2022) revealed a negative correla-
tion between female managers and firms' carbon emissions. 
On the other hand, Cambrea, Paolone, and Cucari  (2023), 
Cucari, Esposito Falco, and Orlando  (2018), and Provasi and 
Harasheh  (2021) found a positive relationship between board 
gender diversity and sustainability performance analyzing the 
Italian context. Similarly, Khatri  (2023) and Mehmood, Luca, 
and Quach  (2023) achieved analogous results by examining 
samples from Nordic countries and European utility firms, 
respectively. However, several studies have shown mixed or 
insignificant results (Rao and Tilt 2016). For instance, Manita 
et al. (2018), analyzing the US context, observed an insignificant 
connection between ESG disclosure and board gender diversity, 
whereas Boulouta (2013) found no positive association between 
gender diversity and environmental performance. Moreover, 
Glass, Cook, and Ingersoll (2016) employed a dataset of the en-
vironmental record of Fortune 500 companies ten 10 years, find-
ing no evidence that women CEOs are more likely than men to 
improve the company's environmental practices.

Based on the aforementioned arguments, we hypothesize that:

Hypothesis 1.  Females on board influence the sustainability 
performance of a company.

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5078 Business Strategy and the Environment, 2025

Hypothesis 2.  Females in managerial positions influence the 
sustainability performance of a company.

3   |   Data and Methodology

We use an unbalanced panel dataset of 2646 public companies 
from Europe, America, and Asia over 10 years from 2013 to 2022. 
The data are sourced from Refinitiv Eikon, which provides in-
formation on financials, board characteristics, ESG scores, and 
firms' sectors.1 Initially, we include all companies available in 
this database. However, due to missing data for ESG and board 
characteristics variables, we lose a consistent portion of observa-
tions, resulting in a final sample of 9841-year observations. Table 1 
shows the distribution of companies by country and sector.2 As 
reported, our sample considers 70 countries, encompassing devel-
oping, emerging, and frontier economies, with the United States 
and China representing the majority at 30% and 13%, respectively.

3.1   |   Dependent Variables

To thoroughly investigate the relationship between female lead-
ership and a company's sustainable performance, we examine 
various dependent variables. Initially, we utilize the ESGScore 
as a measure of ESG performance, obtained from Thomson 
Reuters ASSET4, a high-quality database with multiple sus-
tainability metrics for firms. This score, employed in previous 
studies (Khatri 2023; Naciti 2019), is calculated as the weighted 
average score of three aspects concerning ESG, based on verifi-
able reported data in the public domain. The environmental pil-
lar includes aspects of emission, innovation, and resource use; 
the social pillar includes community, human rights, product 
responsibility, and workforce; and the governance pillar com-
prises corporate social responsibility (CSR) strategy, manage-
ment, and shareholders categories.

Furthermore, we delve into the performance of each aforemen-
tioned pillar—EScore, SScore, and GScore—following the meth-
odology outlined in Yahya (2023). This analysis seeks to clarify 
the relationship between our explanatory variables and the per-
formance of each component of the ESG score, which drives the 
overall result. All these variables range from 0 (reflecting the 
worst) to 100 (reflecting the best).

3.2   |   Independent Variables

In this study, two key variables are examined. To test the first 
hypothesis, we use the percentage of women directors on the 
board (BoardDiv) as a measure of board gender diversity, a 
practice commonly used in literature (Bennouri et al. 2018). 
Additionally, the study employs the WomenManagers vari-
able (Altunbas et  al.  2022), which is calculated as the per-
centage of female managers (top, senior, middle, and junior) 
over the total of managers. Both variables are retrieved from 
Refinitiv Eikon.

Additionally, we include several controls commonly used in lit-
erature that can affect the sustainable performance of a firm. 
We control for the ESG compensation incentive for managers 

(ExecutiveESGComp) (Cohen et  al.  2023), which is a binary 
variable taking value 1 if the company has an extra executive 
compensation related to ESG performance and 0 otherwise. As 
directors' backgrounds can influence the environmental per-
formance of a company (De Villiers, Naiker, and Staden 2011), 
we insert in the regression model the variable BoardExp, com-
puted as the percentage of board members with strong finan-
cial or industry-specific knowledge. The number of independent 
board members and the size of the board are included, as the 
former, according to agency theory, positively impacts en-
vironmental and social performance (Hussain, Rigoni, and 
Orij 2018), but the effect of the latter is still unclear. Although a 
higher number of directors can bring differentiated knowledge 
and experiences, thus enhancing the likelihood of having ex-
perts on sustainability-related themes (De Villiers, Naiker, and 
Staden 2011), an excess of them might compromise the effective 
functioning of the board (Jensen 1993). Finally, we control for 
different financial measures. We include a variable for the size 
of firms, as they have more resources to allocate to sustainable 
practices (Alkhawaja et al. 2023) and leverage, as high debt levels 
make investing in ESG more difficult due to shareholders pres-
sure (Barnea and Rubin 2010; Altunbas et al. 2022). Moreover, 
we control for the return on equity ratio (ROE), because firms 
with high economic resources are more likely to engage in ESG 
activities (Sarhan and Al-Najjar 2023), and liquidity, as higher 
cash flows facilitate ESG investments (Cambrea, Paolone, and 
Cucari 2023). Table 2 summarizes all the variables employed in 
the regression model with their definitions.

3.3   |   Descriptive Statistics

Table 3 presents the descriptive statistics. Notably, the average 
ESG score is approximately 59, with the Social pillar consistently 
ranking the highest at an average of 62. Regarding gender di-
versity, the average percentage of women on corporate boards is 
22.54%, but females hold approximately 31% of managerial posi-
tions. Interestingly, 39% of the sampled firms provide additional 
compensation to top executives based on ESG performance, 
and over 80% of board members are independent. As commonly 
done in literature, the financial control variables have been win-
sorized at the 1st and 99th percentiles to minimize the potential 
impact of outliers (Flannery and Hankins 2013).

Figure 1 illustrates the historical trend of women's representa-
tion on corporate boards, categorized by regions representing 
Europe, America, and Asia. Since 2013, the presence of women 
directors has increased for all three regions, and as expected, 
European companies lead in terms of board gender diversity 
quota, followed by American firms. Asian companies, on the 
other hand, exhibit the lowest percentage of female board mem-
bers. In contrast, Figure 2 depicts a different overview of women 
in managerial positions. Both America and Europe show a 
noteworthy surge in the average number of female managers, 
exhibiting similar trends. Conversely, Asia's growth is much less 
pronounced, with a slower rate of change in the average number 
of female managers in that region.

Table  4 presents the correlation matrix between dependent 
and independent variables. Notably, none of the independent 
variables has a Pearson correlation coefficient higher than 

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5079

TABLE 1    |    Number of companies by country and sector.

Country

Number of companies by sector

CS CD CO EN FI HC IN IT MA RE UT Total

Argentina 1 0 0 0 4 0 0 0 0 0 1 6

Austria 1 0 0 0 0 0 0 2 0 2 1 6

Bahamas 0 1 0 0 0 0 0 0 0 0 0 1

Bahrain 0 0 0 0 2 0 0 0 0 0 0 2

Belgium 3 0 0 0 1 6 0 3 0 4 1 18

Bermuda 0 0 0 7 6 0 2 0 0 1 0 16

Brazil 3 9 8 4 9 4 12 0 6 0 16 71

Cambodia 0 1 0 0 0 0 0 0 0 0 0 1

Canada 6 6 4 31 23 3 16 4 47 18 14 172

Cayman Islands 0 0 1 0 2 1 1 0 0 0 0 5

Chile 1 2 5 0 4 0 5 1 1 1 6 26

China 15 29 36 11 41 45 55 41 42 19 15 349

Colombia 0 0 0 1 4 0 0 0 2 0 1 8

Costa Rica 0 0 0 0 0 1 0 0 0 0 0 1

Cyprus 0 0 0 0 1 0 0 0 0 1 0 2

Czech Republic 0 0 0 0 0 0 0 0 0 0 1 1

Denmark 2 0 0 0 0 8 0 3 0 0 1 14

Finland 4 0 0 0 1 3 0 10 0 2 1 21

France 10 0 0 0 6 12 0 8 0 11 5 52

Germany 10 0 0 0 6 15 0 27 0 10 3 71

Greece 1 0 0 0 1 0 0 0 0 0 2 4

Guernsey 0 0 0 0 0 0 0 0 0 1 0 1

Hong Kong 5 5 7 0 9 4 7 1 1 16 8 63

Hungary 1 0 0 0 0 1 0 0 0 0 0 2

Iceland 0 0 0 0 0 1 0 0 0 0 0 1

India 0 0 0 0 1 1 1 0 1 0 0 4

Indonesia 6 2 8 4 14 1 3 0 4 4 2 48

Ireland 0 0 0 0 1 3 0 0 0 1 0 5

Isle of Man 0 0 0 0 0 0 0 1 0 0 0 1

Israel 1 0 0 0 5 1 3 6 1 1 0 18

Italy 5 0 0 0 6 8 0 7 0 1 11 38

Japan 1 8 15 1 0 5 10 8 4 2 0 54

Jersey 0 0 0 0 1 1 0 0 0 0 0 2

Jordan 0 0 0 0 2 0 0 0 1 0 0 3

Kazakhstan 0 0 0 2 1 0 0 0 1 0 0 4

South Korea 2 4 2 1 5 2 8 4 4 0 2 34

Kuwait 0 0 0 0 1 0 0 0 0 0 0 1

(Continues)

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5080 Business Strategy and the Environment, 2025

0.50, indicating no multicollinearity problems (Koutoupis and 
Malisiovas 2023). This fact is further confirmed by the variance 
inflation factor (VIF) test for multicollinearity. Specifically, the 

highest value is equal to 1.66, and the mean VIF is 1.24, hence 
below the cutoff of 10 suggested in the literature (Hilary and 
Hui 2009).

Country

Number of companies by sector

CS CD CO EN FI HC IN IT MA RE UT Total

Luxembourg 3 0 0 0 0 1 0 3 0 4 0 11

Macau 0 3 0 0 0 0 0 0 0 0 0 3

Malaysia 7 6 16 7 10 5 20 6 6 8 5 96

Malta 1 0 0 0 0 0 0 0 0 0 0 1

Mexico 3 4 8 1 6 2 10 0 6 3 0 43

Mongolia 0 0 0 0 0 0 0 0 1 0 0 1

Netherlands 4 0 0 0 2 3 0 5 0 3 0 17

Norway 3 0 0 0 2 0 0 8 0 3 2 18

Oman 1 0 0 0 1 0 0 0 0 0 0 2

Pakistan 0 0 0 0 2 0 0 0 0 0 0 2

Panama 0 0 0 0 1 0 0 0 0 0 0 1

Peru 0 0 2 0 4 0 1 0 0 0 0 7

Philippines 1 2 3 0 7 0 3 0 0 3 3 22

Poland 4 0 0 0 2 1 0 1 0 0 3 11

Portugal 2 0 0 0 0 0 0 0 0 0 3 5

Puerto Rico 0 0 0 0 2 0 0 0 0 0 0 2

Qatar 0 0 0 0 1 0 0 0 0 0 0 1

Romania 0 0 0 0 0 0 0 0 0 0 1 1

Russia 1 0 0 0 1 0 0 0 0 0 3 5

Saudi Arabia 0 0 1 0 5 0 0 0 0 0 0 6

Singapore 3 1 3 1 3 0 6 1 0 6 1 25

Slovenia 0 0 0 0 0 1 0 0 0 0 0 1

Spain 5 0 0 0 0 4 0 2 0 3 10 24

Sweden 12 0 0 0 9 28 0 24 0 17 1 91

Switzerland 3 0 0 0 6 13 0 6 0 7 0 35

Taiwan 1 4 0 0 14 0 3 15 2 0 0 39

Thailand 3 11 9 7 12 4 4 2 6 6 10 74

Turkey 1 10 8 1 15 1 10 2 5 2 9 64

United Arab Emirates 0 0 1 0 2 0 1 0 1 0 0 5

United Kingdom 15 0 0 0 16 13 0 11 0 12 3 70

United States of America 32 80 27 76 162 107 110 76 51 73 34 828

Uruguay 0 2 0 0 0 0 0 0 0 0 0 2

Vietnam 0 1 2 0 1 0 1 1 0 1 0 7

Total 183 191 166 155 443 309 292 289 193 246 179 2646

Abbreviations: CD = consumer discretionary, CO = consumer staples, ECS = communication services, FI = financials, HC = health care, IN = industrial, 
IT = information technology, MA = materials, N = energy, RE = real estate, UT = utilities.

TABLE 1    |    (Continued)

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5081

TABLE 2    |    Variables description.

Variables Description Definition

ESGScore Dependent variable Overall company score based on the self-reported information in 
the environmental, social and corporate governance pillars

EScore Dependent variable Weighted average relative rating of a company based 
on the reported environmental information and the 

resulting three environmental category scores

SScore Dependent variable Weighted average relative rating of a company based on the reported 
governance information and the resulting three governance category scores

GScore Dependent variable Weighted average relative rating of a company based on the reported 
social information and the resulting four social category scores

BoardDiv Independent variable Percentage of females on the board

WomenManagers Independent variable Percentage of female managers (top, senior, 
middle and junior) over total managers

ExecutiveESGComp Control variable Dummy variable that takes value 1 if a company has an extra executive 
compensation related to ESG performance and 0 otherwise

BoardExp Control variable Percentage of board members who have either an industry 
specific background or a strong financial background

IndepBoard Control variable Percentage of independent board members

BoardSize Control variable Total number of board members

Leverage Control variable Total debt/total assets

LTotalAssets Control variable Natural logarithm of total assets

Cash Control variable Total cash and cash equivalents/total assets

ROE Control variable Net Income/total equity

TABLE 3    |    Summary statistics.

Obs Mean SD Min Max

ESGScore 9861 59.17 16.89 2.60 95.86

EScore 9861 53.71 24.64 0.00 98.84

SScore 9846 61.97 19.61 0.57 98.37

GScore 9861 59.23 20.50 0.89 99.44

BoardDiv 9861 22.54 14.06 0.00 100.00

WomenManagers 9861 30.77 14.76 0.00 89.00

ExecutiveESGComp 9861 0.39 0.49 0.00 1.00

BoardExp 9861 46.81 21.83 0.00 100.00

IndepBoard 9861 80.66 15.23 0.00 100.00

BoardSize 9861 10.22 3.16 1.00 26.00

Leverage 9861 0.28 0.20 0.00 1.82

LTotalAssets 9861 22.82 1.77 15.96 25.64

Cash 9861 0.11 0.12 0.00 0.92

ROE 9861 0.10 0.47 −3.84 2.63

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5082 Business Strategy and the Environment, 2025

3.4   |   Estimation Strategy

To investigate our hypotheses we employ the following panel 
fixed effects regression model:

where BoardDiv is the percentage of females on board, 
WomenManagers is the percentage of female managers (top, 
senior, middle, and junior) over total managers, X is a vector 
of control variables related to board and firm characteristics, 
and �it is the stochastic error term. a represents firm-fixed 
effects employed to eliminate time-invariant omitted vari-
ables effects, or in other words, the firm-level unobserved 

heterogeneity (Flannery and Hankins  2013), whereas � de-
notes time-fixed effects that control for variables constant 
across entities but vary over time. To understand the relation-
ship between our variables of interest and the ESG pillars, we 
use the same estimation model, changing the dependent vari-
able with EnvScore, SocialScore, and GovScore, respectively.

We perform the Hausman test (Hausman 1978), which com-
pares the estimates of fixed effects and random effects and 
suggests which model we should adopt. The test rejects the 
null hypothesis (χ2 = 393.35; p = 0,000) and therefore fixed ef-
fects adoption is preferred. Finally, we use firm-clustered stan-
dard errors robust to heteroskedasticity and autocorrelation 
(Arellano  1987), as suggested by the White test (χ2 = 477.52; 
p = 0,000), which rejects the null hypothesis that the condi-
tional variance of the error term is constant (White 1980).

(1)
ESGScoreit=ai+B1BoardDivit

+B2WomenManagersit+B3Xit+�t+�it

FIGURE 1    |    Average % of women on boards of directors for America, Europe, and Asia region. Source: Authors' elaboration.

FIGURE 2    |    Average % of women in managerial positions for America, Europe, and Asia region. Source: Authors' elaboration.

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5083

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 10990836, 2025, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.4241 by University Of Vaasa, Wiley Online Library on [03/06/2025]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License



5084 Business Strategy and the Environment, 2025

4   |   Results

Using a panel fixed effects regression model, we explore the re-
lationship between the ESG performance of firms and the pres-
ence of females at both board and management levels.

Table 5 reports the outcomes of our analysis. In Column 1, our 
explanatory variables, BoardDiv and WomenManagers, emerge 
as significant contributors to ESG performance, positively af-
fecting the score at 1% and 5% significance levels, respectively. 
This supports all the theoretical frameworks discussed, suggest-
ing that having women in both board and management positions 

enhances overall sustainability performance. This evidence 
provides an initial acceptance to Hypotheses  1 and 2 derived 
according to the literature. Concerning the relation between 
the dependent variable and the controls, we notice that the size 
of the company, the number of independent directors, and the 
expertise of the board are positively associated with the ESG 
score, in line with previous literature (Cambrea, Paolone, and 
Cucari  2023; Harjoto, Laksmana, and Yang  2018). Moreover, 
we notice that the coefficient on ESG executive compensation 
is significant, standing at 3.495. In Columns 2–4, we replicate 
the estimations using sector and country fixed effects, observing 
that our results hold.

TABLE 5    |    Fixed effects model regression: ESG score.

(1) (2) (3) (4)

ESG score ESG score ESG score ESG score

BoardDiv 0.072*** 0.148*** 0.227*** 0.230***

(0.018) (0.021) (0.022) (0.022)

WomenManagers 0.047** 0.043** −0.005 0.042**

(0.022) (0.022) (0.019) (0.021)

ExecutiveESGComp 3.495*** 7.836*** 8.188*** 7.993***

(0.480) (0.536) (0.548) (0.523)

BoardExp 0.075*** 0.002 0.078*** 0.076***

(0.010) (0.012) (0.014) (0.013)

IndepBoard 0.150*** 0.091*** 0.163*** 0.172***

(0.018) (0.020) (0.023) (0.023)

BoardSize −0.081 0.294*** 0.082 0.132

(0.085) (0.106) (0.110) (0.106)

Leverage −0.488 0.031 2.568* 0.323

(1.745) (1.403) (1.376) (1.376)

LTotalAssets 3.818*** 4.277*** 3.810*** 4.681***

(0.565) (0.195) (0.198) (0.201)

Cash 0.602 2.330 5.380** 4.531*

(2.335) (2.386) (2.311) (2.349)

ROE −0.042 1.862*** 1.578*** 1.476***

(0.205) (0.406) (0.402) (0.387)

Time FE Yes Yes Yes Yes

Firm FE Yes No No No

Sector FE No Yes No Yes

Country FE No No Yes Yes

Observations 9861 9861 9861 9861

R-squared 0.395 0.313 0.368 0.411

Number of ID 2646 2646 2646 2646

Note: Robust standard errors in parentheses.
***p < 0.01. 
**p < 0.05. 
*p < 0.1.

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5085

Moving beyond the overall ESG score, Table 6 examines the 
specific pillars. Our results assert that a 1 percentage point 
increase in females on the board solely enhances the gover-
nance score of a firm by 0.24 points, but the same increment in 
women managers results in a 0.074-point variation in the so-
cial score. Both variables demonstrate a positive relation with 
the environmental score, although statistically insignificant. 
Conversely, the presence of an ESG executive compensation 
leads to improvements in all three ESG pillars. The back-
ground of board members and the size of the firm are asso-
ciated with all dependent variables, whereas the number of 
independent directors and the size of the board tend to have 
a positive and negative correlation, respectively, solely on the 
governance score.

Although the primary aim of this analysis is to draw general 
conclusions about the relationship between gender diversity 
and sustainability, we also report results for different regions. 
Table 7 presents the fixed effects regression results for the three 
geographical areas in our sample. We observe that the findings 
vary slightly across regions and in comparison to the overall ev-
idence. This variation is likely due to heterogeneous factors that 
may shape the association between gender diversity and sustain-
ability differently.

The first four columns of Table  7 display regression results 
for the overall ESG score and its individual pillars in the 
American region. Our analysis suggests that although board 
diversity is positively associated with the overall ESG score, 
this effect primarily operates through the governance score. 
Conversely, the proportion of women in managerial positions 
does not show a significant coefficient on any of the ESG pil-
lars in this sample.

However, in the Asian context (Columns 5–8), female managers 
appear to play a significant role in shaping firms' sustainabil-
ity profiles, particularly contributing to the social score. On the 
other hand, board diversity exhibits only a marginal association 
with the governance score in this region.

For European firms (Columns 9–12), the results remain consis-
tent with the overall evidence. We find a strong nexus between 
board diversity and both the overall ESG score and the gover-
nance score, whereas the social score is significantly correlated 
with the presence of female managers. Notably, gender diversity 
does not appear to be significantly linked to environmental per-
formance, except in Asia, where women in managerial positions 
show a positive and significant correlation, and in America, 
where board diversity exhibits a significant but weak association 
with the environmental score.

In summary, we observe some deviations from our full-sample 
findings regarding management diversity in America and 
board diversity in Asia. According to the literature, these dif-
ferences may be explained by cultural factors, which our full-
sample regression captures through fixed effects, assuming 
these factors remain constant over time. For instance, varia-
tions in social norms, institutional acceptance of gender diver-
sity (Zhang 2020), or cultural dimensions (Naghavi, Sharif, and 
Hussain 2021) could account for the cross-country differences 
observed when analyzing the data by region.

5   |   Robustness Checks

As pointed out by prior studies, board of directors' variables 
suffer from endogeneity issues (Adams and Ferreira  2009; Li 
et al. 2021). Although fixed effects specifications address omit-
ted variables issues, bias in estimated coefficients may persist 
due to reverse causality. Specifically, male directors and male 
managers sensitive to sustainable concerns may impact the 
gender diversity percentage in a firm (Altunbas et  al.  2022; 
Chen, Leung, and Goergen 2017). Moreover, as argued by Atif 
et al. (2021), in light of the scarcity of qualified women, female 
directors or managers have the freedom to choose leadership po-
sitions in alignment with their personal preferences, including 

TABLE 6    |    Fixed effects model regression: ESG pillars score.

(1) (2) (3)

E score S score G score

BoardDiv 0.020 −0.018 0.236***

(0.025) (0.022) (0.028)

WomenManagers 0.050 0.074*** 0.004

(0.033) (0.026) (0.032)

ExecutiveESGComp 2.739*** 2.638*** 4.991***

(0.653) (0.554) (0.737)

BoardExp 0.044*** 0.034*** 0.166***

(0.014) (0.012) (0.017)

IndepBoard −0.007 0.034 0.431***

(0.026) (0.022) (0.030)

BoardSize 0.027 0.150 −0.544***

(0.122) (0.110) (0.139)

Leverage 0.929 −3.715* 2.078

(2.337) (2.234) (2.743)

LTotalAssets 4.450*** 2.229*** 3.247***

(0.941) (0.782) (0.887)

Cash −0.309 0.135 −0.274

(3.410) (0.216) (0.270)

ROE 0.043 0.304 −0.591*

(0.309) (0.278) (0.343)

Time FE Yes Yes Yes

Firm FE Yes Yes Yes

Observations 9861 9846 9861

R-squared 0.226 0.279 0.246

Number of ID 2646 2638 2646

Note: Robust standard errors in parentheses.
***p < 0.01. 
**p < 0.05. 
*p < 0.1.

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5086 Business Strategy and the Environment, 2025

T
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 10990836, 2025, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.4241 by University Of Vaasa, Wiley Online Library on [03/06/2025]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License



5087

firms with high levels of CSR. This raises concerns about poten-
tial self-selection bias affecting gender diversity variables.

One further issue is related to the length of the sample. Flannery 
and Hankins  (2013) discussed the presence of a “short panel 
bias” when a fixed effects specification is employed with a short-
length sample. This problem occurs because, by removing time-
invariant unobserved heterogeneity from the model, the fixed 
effects regression establishes a correlation between the depen-
dent variable lag and the error term, potentially distorting the 
results. However, increasing the length of the panel diminishes 
the correlation between the two terms.

Although the authors do not specify an adequate time dimen-
sion, it appears that even with a T = 30, potentially severe biases 

may persist. Considering the main conclusions of Judson and 
Owen (1999), we acknowledge that our dataset is affected by a 
“short panel bias.” To address these aforementioned issues, we 
conduct several robustness checks.

Firstly, we rerun our fixed effects regression excluding US firms. In 
our sample, approximately 30% of companies are from this coun-
try; thus, repeating the calculations without these firms allows us 
to examine whether the results are driven by these observations 
(Fu et al. 2022). The results in Table 8 indicate that, though our 
main results are still consistent, the correlation between female 
managers and ESG performance loses its statistical significance.

Secondly, following previous literature, we employ one-year 
lagged independent variables to minimize simultaneity issues 

TABLE 8    |    Fixed effects model regression: excluding US firms.

(1) (2) (3) (4)

ESG score E score S score G score

BoardDiv 0.052** −0.007 −0.018 0.204***

(0.021) (0.028) (0.025) (0.034)

WomenManagers 0.040 0.040 0.061** 0.017

(0.024) (0.037) (0.029) (0.034)

ExecutiveESGComp 3.662*** 3.164*** 2.914*** 4.862***

(0.549) (0.762) (0.632) (0.830)

BoardExp 0.066*** 0.037** 0.040*** 0.138***

(0.012) (0.017) (0.014) (0.019)

IndepBoard 0.124*** −0.016 0.036 0.371***

(0.020) (0.029) (0.025) (0.032)

BoardSize −0.023 0.052 0.220* −0.467***

(0.098) (0.139) (0.125) (0.161)

Leverage −2.433 −1.742 −4.887* 0.448

(2.148) (3.093) (2.711) (3.410)

LTotalAssets 3.997*** 4.380*** 3.510*** 4.103***

(0.649) (1.132) (0.830) (1.015)

Cash −0.418 −1.278 −0.733 −0.468

(2.782) (4.017) (3.533) (3.806)

ROE 0.014 −0.464 0.384 −0.192

(0.384) (0.415) (0.503) (0.589)

Time FE Yes Yes Yes Yes

Firm FE Yes Yes Yes Yes

Observations 7038 7038 7035 7038

R-squared 0.415 0.247 0.296 0.244

Number of ID 1818 1818 1816 1818

Note: Robust standard errors in parentheses.
***p < 0.01. 
**p < 0.05. 
*p < 0.1.

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5088 Business Strategy and the Environment, 2025

(Cabeza-García, Fernández-Gago, and Nieto  2018; Cambrea, 
Paolone, and Cucari  2023). This specification is motivated by 
the time required for both female directors or managers and 
board characteristics to exert an influence on firm performance 
(Liu, Wei, and Xie 2014). As shown in Table 9, whereas BoardDiv 
confirms its significant relationship with the dependent vari-
ables, WomenManagers do not correlate with ESG score and 
Social score.

Finally, we use the two-step system GMM estimator to further 
address omitted variables and reverse causality (Blundell and 
Bond  1998). This dynamic model exploits lagged dependent 
and independent variables as instruments to solve endogene-
ity, eliminating the need for external instruments (Wintoki, 
Linck, and Netter 2012). Additionally, this model seems to be 

the best choice in the presence of endogeneity, and it is suit-
able for panel data with short periods (small T) and large num-
bers of cross-sections (large N) (Flannery and Hankins 2013). 
To determine how many dependent lags we need to include in 
the models to capture all information from the past, we esti-
mate a regression for each dependent variable as in Wintoki, 
Linck, and Netter (2012). We find that two lags are necessary 
to capture the persistence of performance. Then, assuming 
that all independent variables are not strictly exogenous, ex-
cept the year dummies (Liu, Wei, and Xie  2014), we use the 
forward orthogonal deviations transformation (Arellano and 
Bover  1995) and employ the collapsing method, which con-
strains the number of instruments used, increasing the ef-
ficiency and power of the model (Bowsher  2002). Table  10 
presents the results of the system GMM analysis. The AR(1), 

TABLE 9    |    Fixed effects model regression with lagged variables.

(1) (2) (3) (4)

ESG score E score S score G score

BoardDiv 0.072*** 0.016 0.029 0.168***

(0.021) (0.028) (0.026) (0.035)

WomenManagers 0.015 0.059 0.013 −0.025

(0.025) (0.042) (0.031) (0.043)

ExecutiveESGComp 1.330*** 0.406 0.688 2.937***

(0.475) (0.630) (0.558) (0.867)

BoardExp 0.030*** 0.030* 0.031*** 0.032*

(0.010) (0.016) (0.012) (0.017)

IndepBoard 0.061*** 0.039 0.037 0.101***

(0.019) (0.027) (0.024) (0.034)

BoardSize −0.091 0.007 0.112 −0.471***

(0.081) (0.129) (0.112) (0.150)

Leverage −1.923 −2.193 −3.289 0.693

(1.791) (2.403) (2.384) (2.922)

LTotalAssets 3.256*** 4.058*** 2.278*** 3.560***

(0.618) (0.936) (0.779) (1.090)

Cash 3.340 3.578 2.483 3.212

(2.476) (3.502) (3.251) (3.831)

ROE −0.429** −0.277 −0.135 −0.881**

(0.178) (0.235) (0.240) (0.414)

Time FE Yes Yes Yes Yes

Firm FE Yes Yes Yes Yes

Observations 6970 6970 6963 6970

R-squared 0.332 0.175 0.225 0.154

Number of ID 2003 2003 1999 2003

Note: Robust standard errors in parentheses.
***p < 0.01. 
**p < 0.05. 
*p < 0.1.

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5089

TABLE 10    |    Two-step system GMM.

(1) (2) (3) (4)

ESG score E score S score G score

ESGScoret − 1 0.690***

(0.102)

ESGScoret − 2 0.111

(0.081)

EScoret − 1 0.997***

(0.097)

EScoret − 2 −0.180**

(0.081)

SScoret − 1 0.613***

(0.097)

SScoret − 2 0.172**

(0.080)

GScoret − 1 0.571***

(0.067)

GScoret − 2 0.108***

(0.041)

BoardDiv 0.066** 0.026 −0.003 0.179***

(0.029) (0.031) (0.033) (0.052)

WomenManagers −0.001 −0.002 0.148*** −0.036

(0.047) (0.044) (0.053) (0.078)

ExecutiveESGComp 1.073* 2.191*** 2.508*** 2.498**

(0.580) (0.663) (0.738) (1.027)

BoardExp 0.007 0.007 −0.002 −0.031

(0.018) (0.016) (0.017) (0.029)

IndepBoard 0.000 −0.032 −0.026 0.052

(0.055) (0.041) (0.037) (0.098)

BoardSize −0.452** −0.062 0.088 −1.068***

(0.205) (0.160) (0.156) (0.379)

Leverage 2.450 3.736 −5.444 7.253

(2.961) (3.477) (3.554) (5.933)

LTotalAssets 0.386 0.417 −0.258 1.245*

(0.389) (0.440) (0.444) (0.639)

Cash 2.271 −1.026 6.667 2.196

(6.526) (6.190) (5.432) (9.665)

ROE 1.339 0.440 0.597 0.220

(1.135) (0.387) (0.388) (2.651)

(Continues)

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5090 Business Strategy and the Environment, 2025

AR(2), and Hansen J-test of over-identification are provided. 
AR(1) and AR(2) are, respectively, the tests for first-order and 
second-order serial correlation in the first-differenced resid-
uals under the null hypothesis of no serial correlation. The 
Hansen test assesses the validity of instruments used under 
the null hypothesis that all instruments are valid. All three 
tests affirm the validity of the instruments, as the autocor-
relation test indicates an absence of serial correlation, and the 
Hansen test consistently rejects the null hypothesis, aligning 
closely with the significance range recommended in the liter-
ature, between 0.10 and 0.25 (Roodman 2009).

Once again, our main results hold after controlling for endog-
eneity issues. We find a positive significant relation between 
WomenManagers and the Social Score at the 1% level, but we 
confirm no correlation with the overall ESG score, as indi-
cated by previous robustness specifications. Therefore, we can 
conclude that the first hypothesis is supported by our results, 
whereas the second is only partially confirmed.

6   |   Discussion and Conclusion

This study investigates the contemporary dynamics of gen-
der diversity within corporate governance and management, 
a pressing issue raised by global initiatives such as the UN's 
Agenda 2030. The legislative strides made by countries like 
Norway, France, and Italy, coupled with the European Union's 
2022 Directive, signify a collective effort to promote female par-
ticipation and leadership in decision-making roles.

This study advances the literature on gender diversity by explor-
ing the connection between women's representation in corpo-
rate leadership roles and ESG performance. For the first time, 
we extend the focus beyond board positions, examining the 
presence of females in various management tiers (top, senior, 
middle, and junior) within an international context.

We leverage one of the largest samples to date, comprising 2646 
public companies across Europe, America, and Asia, from 2013 
to 2022. Our results show a positive and significant relationship 
between women on boards, women in managerial roles, and 

overall ESG performance. However, the dissection of the ESG 
factor into its three pillars reveals nuanced influences. Gender 
board diversity is predominantly associated with the governance 
score pillar, whereas gender managerial diversity correlates 
only with the social score pillar. This aligns with the findings 
of Yahya (2023), who observed a positive impact of female CEOs 
on social scores in firms operating in Nordic markets. Moreover, 
our study does not identify any relationship between gender 
diversity and the environmental score, consistent with the ob-
servations of Glass, Cook, and Ingersoll  (2016) who find that 
neither women CEOs nor gender-diverse boards are associated 
with environmental concerns. Galbreath  (2011) suggests that 
sex-based biases or stereotyping by male directors might hinder 
the influence of female directors on environmental issues. His 
work consistently highlights that women might face resistance 
in decision-making processes, limiting their impact on sustain-
able outcomes.

Furthermore, to address potential endogeneity issues, the study 
conducts a thorough battery of robustness checks. In this regard, 
we employ a system GMM estimation model, recognized as par-
ticularly effective in handling short panel bias and mitigating con-
cerns related to reverse causality (Flannery and Hankins 2013). 
The results confirm the consistency of a significant relationship 
between the presence of women on boards and ESG performance 
driven by the governance score. Conversely, the correlation be-
tween women in managerial positions and the overall score does 
not hold. It is observed that gender diversity at the managerial level 
is associated only with the social score pillar.

The results of our investigation hold relevance for a diverse 
audience, including academics, managers, and policymakers. 
This study provides further empirical evidence for the theo-
ries discussed that link gender diversity and corporate dynam-
ics. Even though the presence of women managers does not 
correlate with higher overall ESG scores, the distinct traits 
and altruistic characteristics of women managers enhance 
the social performance of a firm. Concerning managerial im-
plications, our findings suggest fostering a workplace culture 
that prioritizes the hiring and internal promotion of women, 
considering the positive effects that female managers at any 
hierarchical level can have on the social performance of firms. 

(1) (2) (3) (4)

ESG score E score S score G score

AR(1) −3.76*** −5.33*** −3.88*** −6.53***

(0.000) (0.000) (0.000) (0.000)

AR(2) −1.08 1.92* −0.73 −0.71

(0.280) (0.055) (0.464) (0.476)

Hansen Test 34.23 103.56 108.43 28.68

(0.129) (0.281) (0.182) (0.326)

Observations 4891 4891 4888 4891

Number of ID 1456 1456 1455 1456

TABLE 10    |    (Continued)

 10990836, 2025, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.4241 by University Of Vaasa, Wiley Online Library on [03/06/2025]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License



5091

Recognizing that this dynamic can potentially yield benefits 
for overall firm financial performance (Maji and Lohia 2022), 
we suggest a higher integration of gender diversity policies 
into managerial decision-making processes. Furthermore, the 
overall finding that gender diversity correlates positively with 
sustainability performance can provide a strong case in sup-
porting the prevailing legislative frameworks established in 
European nations and outlined in the European directive con-
cerning gender quotas within board compositions (Directive 
No.  2022/2381 2022). American and Asian countries, which 
exhibit either a soft stance or lack a defined position on this 
matter, are encouraged to consider the beneficial outcomes as-
sociated with augmenting the representation of females in the 
hierarchical echelons of corporate structure.

Moreover, the implications extend to the UN's SDGs. It is evi-
dent that the presence of women in leadership positions fosters 
a virtuous cycle, enhancing both a company's sustainability per-
formance and its alignment with these global objectives. Gender 
diversity at the executive level strengthens corporate governance 
and promotes an ethical decision-making and the adoption of 
socially responsible practices. Given that social equality is a fun-
damental pillar of the SDGs, advancing female leadership is not 
merely a matter of equity but also a key factor that leads busi-
nesses to integrate sustainability principles while creating long-
term value for both society and stakeholders.

This study acknowledges some limitations, which, in turn, 
may serve as fertile grounds for future research opportunities. 
Different aspects that could diverge across countries have not 
been taken into account, including, but not limited to, the de-
mographic characteristics of directors and managers such as 
age, ethnicity, nationality, or educational background. Future 
studies could further investigate constituent facets of each pil-
lar, particularly governance and social dimensions, to better 
understand through which channels and by which mechanisms 
gender diversity manifests its influence. Moreover, other stud-
ies may employ different methodologies to address endogeneity 
concerns, such as the 2SLS or Heckman selection model, which 
can be considered for future empirical analysis.

Conflicts of Interest

The authors declare no conflicts of interest.

Endnotes

	1	Firms are divided in 11 sectors following the GICS classification: 
communication services, consumer discretionary, consumer staples, 
energy, financials, health care, industrial, information technology, 
materials, real estate, and utilities (https://​www.​msci.​com/​our-​solut​
ions/​index​es/​gics).

	2	We include financial institutions in our sample. Our results hold even 
if we exclude them from the analysis. However, for the sake of brevity, 
we do not provide the regression results.

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	Gender Diversity Leadership and ESG Performance: The Influence of Women on Boards and in Management
	ABSTRACT
	1   |   Introduction
	2   |   Literature Review and Hypothesis Development
	3   |   Data and Methodology
	3.1   |   Dependent Variables
	3.2   |   Independent Variables
	3.3   |   Descriptive Statistics
	3.4   |   Estimation Strategy

	4   |   Results
	5   |   Robustness Checks
	6   |   Discussion and Conclusion
	Conflicts of Interest
	Endnotes
	References