A Sizable Advantage: Environmental and Social Sustainability Implications of Gender Diversity

We study the effect of board gender diversity on environmental and social performance of firms. Our model complements existing literature in the field of corporate governance and sustainability by hypothesizing a direct positive effect of board gender diversity on environmental and social performance. We further argue that this direct effect is moderated by firm size such that the effect of board gender diversity on environmental and social performance is larger for smaller firms. We find evidence for our hypotheses when using board gender quotas as the empirical setting for our identification strategy. Our results of a staggered difference-in-differences approach with 2,981 firm-year observations of 511 firms in eight European countries with mandatory board gender quotas provide tentative evidence of a direct effect of board gender diversity on environmental and social performance. Yet, the moderation effect is positive and highly significant, which suggest that particularly smaller firms are able to improve environmental and social performance though board gender diversity.