Environmental responsibility and corporate governance: Assessing the impact of gender diversity on greenhouse gas (GHG) emissions in German listed companies

Abstract

This empirical research study delves into the correlation between the ‍emission of greenhouse gases (GHG) and the diversity of board members in German-listed companies. The investigation aims to determine whether board gender diversity impacts a company’s commitment to reducing GHG emissions. To explore this relationship, panel data analysis uses a sample of German publicly traded companies. These firms are known for their solid environmental governance and are subject to women board directors’ quota requirements over a specific period. Our study employs multiple identification techniques to examine the impact of women’s board diversity (WBD) on GHG emissions. The results reveal that WBD does not significantly influence GHG emissions. This outcome remains consistent using robust two-stage least squares (2SLS) regression analysis. However, when we introduce a dummy variable for WBD at ‍the 1–25% level, we observe a positive impact of WBD on GHG ‍emissions. This finding supports the critical mass theory, which suggests that the presence of at least 25% of women on board favours a reduction in GHG emissions. The insights from this research hold significance for policymakers, investors, and corporate leaders seeking to understand the potential advantages of gender diversity in mitigating environmental impacts. Our study supports the concept of social loafing (Williams & Karau, 1991) and the critical mass theory (Torchia et al., 2010) in explaining a ‍relationship between WBD and GHG emissions in German publicly traded companies in the S&P Global 1200 Index.