This study aims to investigate the impact of board diversity on the Environmental, Social and Governance (ESG) performance of European listed companies. Specifically focusing on gender diversity and directors’ specialized skills, this study aims to provide insights into how these elements collectively influence ESG outcomes.
Using a data set encompassing 2,110 publicly listed European companies spanning from 2010 to 2023, this research uses the Ordinary Least Squares regression model with the fixed effect. This study incorporates a dynamic two-step Generalized Method of Moments technique to address the potential endogeneity challenges.
The findings of this study indicate a positive and significant correlation between gender diversity, directors’ specific skills and ESG scores of listed companies. Gender diversity and directors with industry or finance expertise individually contribute to elevated ESG performance, with their combined impact being particularly pronounced. This underscores the pivotal role of diverse skills within the board in shaping superior ESG outcomes.
This study significantly advances the understanding of ESG performance by examining the joint influence of gender diversity and directors’ skills. The insights offer practical guidance for organizations aiming to enhance their ESG performance, contributing to the broader discourse on sustainable business practices in the realm of contemporary corporate governance.
