Does Gender Diversity on Boards relates to ESG Performance?

In an era marked by political unrest, environmental issues, and economic difficulties, corporate responsibility is increasingly coming into focus. Despite growing recognition of their importance for justice and corporate success, women in leadership positions are still not treated equally. This discrepancy not only represents a deep injustice but also overlooks the positive impacts of gender diversity on corporate management. Against this backdrop, this study examines the relationship between the presence of women on boards and the ESG (Environmental, Social, Governance) outcomes of companies. Using a sample of 1,878 European companies for the period 2012-2022 and the Gender-Balanceon-Boards (GBB) Index to measure gender diversity, the analysis shows a positive, yet non-linear relationship between the proportion of women on boards and the ESG performance of companies. Specifically, it is found that ESG performance reaches its maximum when the proportion of female directors on the board is about 60%. These results underscore the importance of an approximately equal representation of both genders in leadership bodies and provide valuable insights for academics, business leaders, and policymakers committed to fostering a sustainable and inclusive business world.