Is Gender Balance Better for the Environment?

Having more women in the boardroom might not just signify progress for gender equality and women’s rights - it could also help safeguard the environment and save companies millions of pounds in environmental law violation payments, as well. That’s according to a new study from the University of Adelaide, which found that gender diversity at the top level of businesses resulted in fewer environmental infringements.

A women’s touch in the boardroom

The study was carried out by Dr Chelsea Liu, a senior lecturer at the University of Adelaide in Australia and published in the Journal of Corporate Finance. In it, Dr Liu looked at almost 2,000 lawsuits filed against 1,500 businesses belonging to financial services company Standard and Poor’s in the United States between 2000 and 2015.

By specifically looking into the boardroom makeup of the companies which were the targets of the lawsuits, Dr Liu found a direct correlation between the number of high-level female employees and the likelihood of being sued for an environmental infringement. Indeed, for every female added to a company’s board of directors, the likelihood of them being sued fell by 1.5%.

When looked at from a purely financial perspective, that amounts to no small sum. Given that supermarket giants Tesco were fined £8 million just last year for their involvement in a petrol pollution scandal, and that US environmental lawsuits average around $204 million, that 1.5% could equate to £120,000 for Tesco or $3.1 million for the average American case.

Broadening horizons

The results are being attributed to diversity theory, which stipulates that collective decisions are often proven to be wiser when they encompass a wide range of views and perspectives from people from different backgrounds. There is also a suggestion that women are less headstrong and more open to listening to others’ inputs, which can lead to more balanced decisions.

“Having a range of perspectives can result in improved corporate environmental policy, which in turn can reduce exposure to environmental lawsuits,” commented Dr Liu. “Previous research also found that female executives are less overconfident and more willing to seek expert advice than their male counterparts.” The publication of the study is incredibly timely, given that several countries around the world (including Australia) are discussing the possibility of bringing in mandatory boardroom quotas for females.

It’s also pertinent to the environmentally conscious community. With businesses being encouraged to look after their carbon footprint in a wide variety of different ways, from monitoring dust in the workplace to using wireless technology to integrate gas detection and worker safety, Dr Liu’s study provides real evidence that bringing females into the boardroom can satisfy gender quotas, save companies money and meet their environmental obligations as well, all in one fell swoop.