Female leadership and environmental, social and governance performance. Empirical evidence from France

In the European Union (EU), recent years have seen firms’ wide adoption of non-financial reports focusing on environmental, social and governance (ESG) activities following the Non-Financial Reporting Directive 95 / 2014 (Pizzi et al., 2023a, 2023b; Nicolò et al., 2024a; Venturelli et al., 2018). A strong focus on risk management and corporate governance can be identified in these activities and is often linked to ethical considerations (Hussain et al., 2018; Lehner et al., 2019).

Furthermore, specific issues have been found positively related to ESG practices, among which there is the number of women on corporate boards of directors (BoDs). At the European level, one of the main ways of increasing the presence of women on boards has been the imposition of legal quotas (The European Commission, 2020). Although European legal quotas on board gender diversity have raised concerns, the number of women on boards in Europe has successfully increased over a relatively short time frame (García-Sánchez et al., 2023; Gul et al., 2022; Zampone et al., 2024). The proportion of women on boards in the largest listed companies in the EU ranges mostly from 22% to 45% (EIGE, 2021).

On November 2022, the Directive (EU), 2022 / 2381, the so-called “Women on Boards” Directive, has set requirements according to which by the end of June 2026, all the largest publicly listed companies in the EU have to take measures to increase women’s presence at their helm. Hereafter, an increase in women’s participation in the labour market has a strong, positive impact on the economy.

Despite current research on ESG performance and gender diversity, the scientific debate about how the presence of women in leadership positions (members of the board of directors [BoD], in C-suite positions and across the executive leadership) drives firms’ outcomes and non-financial performance is characterised by a high degree of fragmentation (El-Dyasty and Elamer, 2023).

So, this study explores this topic in the European context of France by examining the effect of female leadership on ESG score. The motivation for investigating this topic in the context of France is straightforward. France is one of the pioneers of non-financial reporting, specifically on gender equality, and has been mandating detailed requirements for over a decade (Aureli et al., 2018). In France, where social reporting became legal in 1977, the state’s intervention in regulating non-financial reporting is strong, and the rules are quite detailed. The Directive of 22 October 2014 was transposed into French national law in 2017. Under this regulation, companies that exceed certain thresholds must draw up an annual declaration of extra-financial performance (DPEF) each year. Therefore, the paper aims also to contribute to the recent agenda launched by academics about the need to explore the real effects related to the transposition of Directive 2014 / 95/EU by the Member States (Baumüller and Sopp, 2022; European Reporting Lab, 2021).

By collecting data from Refinitiv Eikon database, this study uses ordinary least squares (OLS) panel regression analyses for a sample of French-listed companies that belong to non-financial industries (manufacturing, commercial and service) covering the period 2018–2022.

Although the ESG issues began in 2005 with the publication of the report named “Who Cares Win” released by the UNGC (United Nation Global Compact, 2005) and although France represents the pioneer in the EU of non-financial reporting and gender equality policies, data on Refinitiv Eikon were collected only from 2018 onwards. This was mainly due to a huge amount of missing data before that period.

The main variables selected in the model are ESG score (dependent variable), women on board (the number of women in the boardroom) and female executives on board (the number of female executives in the boardroom). Empirical findings show that the presence of female board directors and female top executives is positively associated with ESG performance. Secondly, the interaction effect between female and cultural leadership among executives does not impact ESG performance. This study may underline the relevance of different roles for women (directors and/or top executives) in influencing ESG issues and may inform future policy and regulatory initiatives.

The main contribution of this paper is twofold. Firstly, this paper is based on empirical quantitative analysis that supports the importance of gender and cultural diversity in the board’s growing power and influence on stakeholders’ interests. Specifically, we demonstrate that French-listed companies could view gender diversity and leadership as a proxy for the quality of corporate governance. We then demonstrate that the interaction terms female and cultural leadership among executives does no impact ESG performance. Secondly, this study provides data analysis and sources from France, a country with interesting characteristics: a rising number of female board members, a legal framework for gender diversity in the boardroom, a significant economic volume and a richness of data-available companies, but that still remains underexplored in existing studies. As France is considered the pioneering country for gender equality at EU level, we test whether female leadership has an impact on ESG score in the period 2018–2022.

This paper proceeds as follows. Section 2 presents the theoretical framework and hypotheses development; Section 3 illustrates research methodology; Section 4 illustrates empirical results; and Section 5 provides discussion and concluding remarks.

Accounting, corporate governance as well as management literature agree that the BoD represents the most critical corporate governance body as well as being ultimately responsible for the long-term success of the company (Cambrea et al., 2019; Klettner et al., 2014; Stiles, 2001; Wheelen et al., 2017). The BoDs represent the strategic arm of business organisations, and their composition is decisive for the organisations’ success (Berraies and Rejeb, 2019). Board diversity is not a static concept but a relevant mix of several dimensions (e.g. gender, age, nationality, ethnicity, educational and cultural background, skills, experience and tenure) for the board, based on business goals and future developments. Generally, directors’ characteristics are classified into several categories, i.e. demographic or personality traits (Milliken and Martins, 1996). In this context, the most debated issue concerns whether and to what extent boards must rely on directors with various attributes (specifically, in terms of gender) to assist them in elaborating and reviewing corporate strategy (Gani and Jermias, 2006; Rao and Tilt, 2016).

In this study, we discuss two main theoretical perspectives showing that higher number of females on board generates positive effect on board effectiveness and long-term performance: gender role theory (GRT) and critical mass theory (CMT). Other theories not applied in this study refer to agency, stakeholder and legitimacy.

The first perspective is the GRT, also called social role theory, primarily elaborated by Eagly (1987), which declares that an individual’s gender determines his/her behavior and its effectiveness with respect to influence (Terjesen et al., 2016, p. 6). This theory indicates how male and female directors normatively prescribe behaviour concerning corporate communication. Specifically, women are more likely to assume communal characteristics such as sympathy and gentility (Eagly, 1987). On the other hand, men will more likely be assertive and aggressive. According to Rosener (1995), flexibility represents one of the main gender roles associated with females, which may lead to a better ability to manage controversial or ambiguous situations. Gender roles are relevant for the board; directors must use effectively influential communication tactics (Terjesen et al., 2016).

The second theoretical perspective is CMT (Kanter, 1977). It suggests that when the size of a minority group reaches a certain threshold or “critical mass”, the influence of this minority group increases significantly. Konrad et al. (2008) suggest that the critical mass of women on boards is reached when at least three female directors are on a board (“the magic of the number three” as they call it). Their main argument is that with three female directors, it is possible to increase the likelihood that women’s voices will be heard, that their ideas will influence the board’s decision-making and that the dynamics within the board will change significantly. Joecks et al. (2013) find that a critical mass of about 30% of female directors significantly impacts firm performance. “Critical mass” effect influences and moderates the significant and positive correlation between gender diversity on boards and ESG disclosure. Table 1 summarises the theoretical frameworks used in main scientific contributions on women on boards and ESG.

Women are different from male counterparts in several aspects (i.e. behaviour, experience and values), and boards need several of their characteristics, such as their increased diversity of opinions and ability to improve the corporate image with stakeholder groups (Cambrea et al., 2019; Galbreath, 2011; Zampone et al., 2024). Moreover, women increase firms’ reputation (Bear et al., 2010; Brammer et al., 2009) and add different perspectives, experiences and expertise to men’s (Daily and Dalton, 1994; Hillman et al., 2001), also because of their greater wisdom and diligence (Huse and Solberg, 2006). Women directors contribute to a more independent view to boards (Fondas, 2000), and can change the firm’s strategic direction (Selby, 2000).

The relationship between the presence of women and companies’ performances has been investigated regarding financial features as well, concluding in some cases that gender diversity has a positive impact (Garcia-Meca et al., 2015). Recent research has paid attention to the presence of women on boards (Khan et al., 2019; Nguyen et al., 2020). Boards with many women may increase the quality of decisions and benefit from different approaches and perspectives (Adams and Ferreira, 2009; Huse and Solberg, 2006). Gul et al. (2011) state that gender diversity enhances the quality of the board analysis and the oversight function. Women on board have, thus, the ability to better develop communication and maintain good relations with all stakeholders (Liu et al., 2014).

In line with earlier studies and theoretical perspectives, more women on boards can reduce stakeholder conflicts, leading to more sustainable reporting and performance (Nicolò et al., 2021; Zampone et al., 2024). Based on theoretical arguments and empirical evidence from previous literature, we thus expect that the number of women directors influences the firm’s ESG performance level. Specifically, we expect that board gender diversity will be able to affect ESG score. Previous research has looked at the worldwide context, as well as the European area. Apart from a recent empirical study about gender diversity in top management and environmental performance in French-listed firms (Burkhardt et al., 2020), the French context remains underexplored. Therefore, we believe there is a gap in the literature regarding the study of the relationship between the presence of women on BoDs and ESG scores in French-listed companies. We thus formulate the following hypothesis:

The Sustainable Development Goal 5 of the United Nations calls for effective participation of women and equal opportunities for leadership at all levels of decision-making, which is why gender diversity is gaining ground (United Nations, 2016; Ali et al., 2023). From this, a number of empirical papers study the relationship between female leadership and ESG performance. Because of their psychological traits, women directors would be more sensitive to environmental and social issues while balancing stakeholders’ needs (da Silva Monteiro and Aibar‐Guzmán, 2010; Terjesen et al., 2009). Based on a study of US companies, Adams and Ferreira (2009) show that female leadership can increase inputs in governance, for example a greater attendance at board meetings, but not necessarily better governance outcomes. Using a panel of US companies listed in Business Ethics 100 Best Corporate Citizens, Mallin and Michelon (2011) test the link between female directors’ proportion and corporate social performance. They suggest that female directors are positively associated with non-financial performance. Based on a sample of US firms, Zhang et al. (2013) demonstrate that a higher proportion of female directors contributes to the company’s corporate social responsibility (CSR) outperformance relative to its peers. Using response/non-response to ESG disclosure initiatives as a binary response variable, Ben-Amar et al. (2017) found a positive impact of female directors’ proportion on response rate in a sample of Canadian companies. Wei et al. (2017) analyse a sample of Chinese-listed companies and reveal that the presence of women directors positively affects corporate environmental motivation only when their number exceeds three. Based on a panel of Australian-listed companies, Galbreath (2011) proposes a study that focuses on the difference in female leadership’s impact on corporate social performance, showing women directors’ positive impact on social issues. Dwivedi et al. (2023) still found a positive impact of female leadership on ESG performance in Indian companies. Harjoto et al. (2020) demonstrate, for S&P500 companies, that ESG reports with a female (vis-à-vis male) executive are more readable, show more solidarity with readers and are positively associated with firms’ future social performance. Although the relationship between female leadership and ESG performance has been tested in several countries as above described, mainly non-EU countries (US, Canada, China, Australia, India, etc.), EU countries and specifically France, which is considered the pioneering country of gender equality reporting, remains underexplored. Therefore, in line with prior research, we believe that a gap in the literature remains regarding the study of the relationship between female top executives and ESG scores in French-listed companies. We thus formulate the following hypothesis:

The concept of board cultural diversity refers to the idea that board members belong to different cultures, have different ethnic backgrounds (Anderson et al., 2010), cultural backgrounds (Al-Hiyari et al., 2023) and different behaviours, beliefs and values (Hofstede, 2001) that shape their collective perception of the world. The current stream of research on the connection between women directors, directors with diverse cultural backgrounds and ESG is inconclusive. Ethnic diversity could have positive and negative consequences on corporate boards (Milliken and Martins, 1996). Directors with diverse cultural backgrounds tend to challenge and oppose management more openly than their counterparts. They would strengthen the board’s independence and foster more fruitful international relations (Kang et al., 2007). Board cultural diversity has been found to have a negative impact because of coordination problems, slower and more complex communication, which is a source of misunderstandings (Al-Hiyari et al., 2023). Frijns et al. (2016) have found that the negative effects of cultural diversity on firms’ performance are mainly concentrated among independent directors. They have nuanced their analysis by showing that the negative impact of cultural diversity on firms’ performance is mitigated by the complexity of the firm and the size of foreign sales and operations. The few studies investigating the effects of culturally diverse boards on firms’ financial and non-financial performance have produced contradictory and inconclusive results. A negative association between cultural diversity and financial performance has been shown by studies from Scholtz and Kieviet (2018) and from Menicucci and Paolucci (2022). According to Frijns et al. (2016), the negative impact of cultural diversity on performance is mitigated by the complexity of the firm and the size of its foreign sales and operations. In addition, they find that the negative effects of cultural diversity are concentrated among the independent directors. In contrast, Beji et al. (2021) and Dong et al. (2023) highlight a positive relationship between cultural diversity and ESG performance. Board members from different cultural backgrounds can help manage various stakeholders’ interests and having foreign directors on boards improves business success (Ben‐Amar et al., 2013). Hence, the contradictory evidence in the literature on ESG performance within the context of board cultural and gender diversity provides sufficient ground for further research. To our knowledge, the literature on assessing the impacts of different types of board diversity on ESG performance is scarce for non-financial institutions and in France. Consequently, a gap exists in the literature about the relationship between the presence of female top executives and top executives with different cultures. Insofar our hypothesis states:

This research considers a data collection from a sample of French-listed companies belonging to the non-financial industry sectors.

Data were collected from Refinitiv Eikon database, which has already been used by scholars in ESG issues analysis (Demers et al., 2021; Garcia et al., 2017; Dorfleitner et al., 2020; Nicolò et al., 2021; Pozzoli et al., 2022).

From the original population of French-listed companies, we removed banking, insurance and financial institutions as well as firms with no data available from Refinitiv Eikon on ESG performance and/or information on corporate governance or financial accounting data.

The Refinitiv methodology is designed to objectively measure a “company’s” relative ESG performance and calculates ESG information based on disclosures from company annual reports, CSR reports and corporate websites, as well as from stock filings using measures that reflect on comparability, impact, data availability and industry relevance, with the adoption of weights to capture industry specificities (Aluchna et al., 2022).

All the companies in our sample exceed thresholds introduced by 2017 French national law, forcing them to draw up an annual DPEF each year. We test our hypotheses using a sample of 185 French-listed firms covering the period of 2018–2022; therefore, we collected a total of 925 observations.

This study first applies the statistical models in equation (1) and then conducts a descriptive statistical analysis of the sample together with multiple regressions to determine the relationships between explanatory variables and ESG performance. By applying a balanced panel data regression based on the set of variables chosen, the empirical models to be tested (1, 2 and 3) are specified below. The coefficients in all equations are estimated based on our OLS panel data regression (fixed effects) analysis from 2018 to 2022.

To test H1a and H1b, our empirical models (1) and (2) are set out below:

To test H2, our empirical model with the interaction variable (3) is reported as follows:

where ESG_Score is the proxy of ESG performance for company i times t. The ESG score represents the dependent variable. Over 500 ESG measures at the company level are captured and calculated by Refinitiv Eikon database. These are divided into 10 categories, including 3 environmental categories, 4 social categories and 3 governance categories. These categories reformulate the three pillar scores and the final ESG score, which is based on publicly available data and reflects the company’s ESG performance, commitment and effectiveness (Refinitiv, 2021); Females is the percentage of women on the board; Executive_Females is the percentage of female top executive members; Cultural is the percentage of board members whose cultural background is different from that of the company’s headquarters. Executive_Cultural is the percentage of senior executives whose cultural background is different from that of the company’s headquarters; Executives_Interation is the interaction effect between Executive_Females and Executive_Cultural.

We also identified several control variables which are reported as follows: Board_Skills is the percentage of board members who have either an industry specific background or a strong financial background; Board_Indep is the percentage of independent members in the board; Board_Size is the total number of board members at the end of the fiscal year; Log_Asset is the logarithm of total assets, which represents a proxy for company size; Price is the price closing for year t, which represents the market value per share for companies; ROE is the return on equity, which is the proxy for companies’ profitability; Log_Sales is the logarithm of sales revenues from business activities, which represents a second proxy for company size; D_E is the index of net financial debt over common equity, which is the proxy for company solvency; and βi = various model parameters, i = the analysed company, t = the time period 2018–2022 and ε = the error term.

The descriptive statistics of the numeric variables are presented in Table 2 and are used in the regression model applied to French-listed companies in 2018–2022. The descriptive results indicate that the mean of the ESG score is 56.13, while the single pillars are 55.27, 61.06 and 49.63, respectively, for E, S and G. The percentage of females on board is 42.21 on average, while the executive females are on average only 18.09.

The examination of the correlation matrix (not reported) shows that all correlation coefficients are lower than 0.8, which indicates that there are no serious correlation problems between a given explanatory variable and other explanatory variables in the model. Furthermore, all variables have a variance inflation factor (VIF) value (Table 3) of less than 10. These results allow us to conclude that there is no serious problem of multicollinearity.

We set the panel data regression analysis based on OLS to estimate the model’s parameters and to input all the data into Stata software. The Model 1 indicates an R-squared value within of 0.1391. As shown in Table 4, there is a positive and significant relationship between females and ESG_score since the significance is at the 0.1% level and has a positive coefficient of 0.275. This empirically demonstrates that the number of females produces higher levels of ESG performance (Model 1). Furthermore, we found a strong positive relationship between executive females and ESG since the significance is still at the 0.1% level (coefficient of 0.189). The results demonstrate that having female executive members on board generates a higher ESG score (Model 2). In contrast with the above results, Model 3 includes the interaction effect between the presence of executive females and senior executives with a cultural background different from the location of the corporate headquarters (InteractionExecutives). The interaction has not been statistically significant in relation to ESG performance, which means that two different profiles of “executives” that have been serving the organisation do not generate positive impacts (neither negative) on ESG issues.

Sustainability accounting has recently addressed a heterogeneous assortment of activities aiming at improving organisation’s ESG performance following the Non-Financial Reporting Directive 95 / 2014 (Lehner et al., 2019; Nicolò et al., 2024a; Pizzi et al., 2023a, 2023b). As mentioned, the scientific debate on many events that have radically impacted sustainability accounting and non-financial reporting is communicated by a recent special issue that Venturelli et al. (2022) address. This call has motivated and inspired our study. As noticed, European non-financial regulation has recently been characterised by a high degree of attention paid by policymakers, practitioners and academics to the effects related to the transposition of Directive 2014 / 95/EU by the member states (Korca and Costa, 2021; Nicolò et al., 2024b; Pizzi et al., 2023a, 2023b). Within this Directive, specific issues have been found to be positively related to ESG practices, among which is the number of women (in %) on corporate BoDs.

The motivation for investigating the research question in the context of France is straightforward. France is considered one of the pioneers of non-financial reporting, specifically on gender equality, and has been mandating detailed requirements for over a decade (Aureli et al., 2018). In France, where social reporting became legal in 1977, the state’s intervention in regulating non-financial reporting is strong, and the rules are quite detailed. Although current research on gender diversity and ESG performance, the authors know little about how different female roles (directors and/or executives) drive firms’ outcomes and non-financial performance (El-Dyasty and Elamer, 2023). This study explores this notion in France’s European market by examining the effect of female leadership on ESG scores. It underlines the relevance of different roles of females (directors and/or executives) in influencing ESG issues and may inform future policy and regulatory initiatives. By collecting data from the Refinitiv Eikon database and using an OLS panel regression analysis for a sample of French-listed non-financial companies in 2018–2022, we found that the presence of female directors and female executives is positively associated with ESG performance. Secondly, the interaction effect between female and cultural leadership does not impact ESG performance.

This paper adds to the scarce but increasing literature in accounting dealing with corporate governance and gender. This paper provides evidence on the importance of the gender and cultural diversity in the board growing power and influence on stakeholders’ interests in France.

France represents a country with rising woman directors, arguably minimal regulatory intervention to gender diversity in boardroom, a richness of data-available companies, considerable economic volume and global impact, that is, France, which remains underexplored in existing studies and constitutes an interesting context of inquiry. We empirically support the argument that French-listed companies could view gender diversity and leadership as a proxy for the quality of good governance. We also demonstrate that the interaction term female and cultural leadership among executives does not affect ESG performance.

This study also adds to the ongoing debate on the impact of gender diversity and female leadership in accounting and corporate governance studies. Regulators and, more generally, actors normally involved in policymaking may also ask organisations to establish a balance between the presence of male and female on board to promote ESG activities in their organisations. Our study will help policymakers develop specific laws and rules on gender equality in the future. The research agenda should assist policymakers by fostering an understanding of how and what could be changed in future regulation after the EU Directive 95 / 2014 (Pizzi et al., 2022, 2023a, 2023b).

Despite the importance of the current study, it has some limitations that can be overcome by further studies, as follows. Firstly, we use Refinitiv ESG scores, which are relevant to reflect the company’s ESG performance, commitment and effectiveness, based on the self-reported non-financial information categorised into three dimensions – ESG information. Some shortcomings of the performance scoring exist. More specifically, in line with Aluchna et al. (2022, p. 9). while the disclosure of immaterial data points does not affect the assessment, the lack of information on highly relevant aspects has a negative impact on the “company’s” score. Furthermore, the ESG data collected from the Refinitiv Eikon database presents one main limitation since the ESG performance is offered yearly. Having data monthly may provide a more accurate proxy. Secondly, the paper examines the latest available years from 2018 to 2022. Accordingly, future research could examine more years and perhaps focus on pre- and post-application of Directive 95 / 2014, and/or wait for the next years to verify what happens after the pandemic situation, the effects of which are still being felt. Thirdly, since different sectors can have different ESG performances (ESG score in service sectors may be higher than ESG score of polluting industry), and also various feminisation rates (service sector is more feminised than automobile, aircraft, petroleum or heavy industrial sector), additional future studies may refine the analysis. Lastly, future research should more effectively address the challenges of cultural diversity and intersectional approaches, including gender-based cultural diversity and the complexities between the “Global North and South” in relation to intersectionality and other diversity characteristics. In addition, comparative studies of companies in EU and non-EU countries would offer valuable insights for future contributions.