More Gender Diversity on Corporate Boards Makes for Better Climate Governance and Innovation

Shanghai and Tokyo, December 1, 2020 – A proportion of 30% or more for women on corporate boards has shown a positive correlation with better climate governance and innovation in the global electric utilities, oil and gas, and mining sectors over the last four years, according to a new report by BloombergNEF (BNEF). Despite an eightfold increase over the last decade in the number of companies having boards with at least one-third of female representation, these still made up only 16% globally out of the 11,700 companies analyzed in this study.

Published today at the BNEF Summit Shanghai, the report, Gender Diversity and Climate Innovation – written in collaboration with the Sasakawa Peace Foundation (SPF) – examines the impact of gender diversity on climate governance, climate performance, innovation, and climate innovation.

Gender diversity does not directly contribute to lowering emissions. But, for instance, leading integrated oil companies with higher female representation at the board level are also more likely to have set decarbonization strategies and to have invested in digitalization activities.

Miho Kurosaki, head of Japan and Korea research at BloombergNEF, said: “Increased and standardized disclosure of gender diversity will be essential, and will ultimately enable companies and financial markets to better assess the linkages between diversity and business performance. Companies should consider setting longer-term diversity goals in the same fashion that they set goals for financial performance and climate governance. Companies can do more than target long-term diversity; they can commit to it. Financial markets can then evaluate the commitments.”

Ayaka Matsuno, director of the Gender Investment and Innovation Department at SPF, said: “This new analysis marks an important step forward in tracing the positive correlation between gender diversity and better climate governance and innovation. In particular, the findings show that having a critical mass of more than 30% women on boards makes a difference. In an encouraging sign, over the last 10 years the share of companies around the world with more than 30% women on boards has grown from 2% to 16%, according to data collected by Bloomberg. It is critical to continue this progress to promote gender diversity both at the decision-making level and in the overall workplace.”

Legislation and reporting requirements are seen to accelerate disclosure on gender diversity and climate change. European countries have made significant progress through voluntary initiatives since 2011 and by introducing legislated targets for female representation at corporate board level, with 11 EU member countries mandating various levels of female representation on boards. At the same time, Asian nations are lagging on diversity disclosure and performance.