Female directors improve corporate social responsibility

Dr Anish Purkayastha

Dr Anish Purkayastha

Companies are more likely to take corporate social responsibility seriously if they have more women on their board of directors, new University of Sydney Business School research reveals.

As Australia gradually approaches equal gender representation on boards, our neighbours in the Asia-Pacific region are also seeing the benefits of smashing the glass ceiling.

New research published in California Management Review has revealed that increasing the number of women directors sees companies improve their environmental, social and corporate governance through a two-fold process.

Companies with higher numbers of female board members are not only more likely to form a corporate social responsibility (CSR) committee, but they are also more likely to appoint more qualified board members to that committee.

Dr Anish Purkayastha , lecturer in International Business at the University of Sydney Business School, and the research team crunched the data over 11 years from a dozen countries: China, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Thailand and Vietnam.

Together these 12 countries account for nearly half of the world’s population and almost a third of the world’s GDP.

In analysing a total of 31,769 firm-years of data, comparing board biographical profiles against committee information, the research revealed:

  • Every 1 percent increase in the presence of women directors on the corporate board increases the probability of forming a CSR committee by 0.58 percent
  • Every 1 percent increase in the presence of women directors on the corporate board increases the probability of staffing the CSR committee with a greater number of board members by 0.56 percent.

The findings are particularly significant, Dr Purkayastha argues, in countering prevailing attitudes that prevent women from accessing executive positions.

"Though most of the narratives in the popular press and academic research remain consistent on the need to remove gender discrimination in the workforce, they often conclude that women, on average, have higher levels of risk aversion, lower levels of overconfidence, and less competitive desire than men. These narratives undermine more women being placed in leadership positions," Dr Purkayastha said.

Our research indicates that improving gender parity on corporate boards reaps benefits by improving governance structure in the form of effective CSR committees, which has immediate and long-term benefits for companies.

"This is an important finding considering that an effective CSR committee helps the company navigate to a greater level of environmental, social and corporate governance, which in turn creates value including top-line growth, reduced regulatory and legal intervention, and improved productivity."

The research controlled for factors including company size, economic performance, and industry. It also accounted for the country’s gender parity as measured by the World Economic Forum’s Global Gender Gap Index.

The index rates countries on their progress in eliminating gender-based gaps among four key dimensions: economic participation and opportunity, educational attainment, health and survival, and political empowerment

The research found the impact of female board members on CSR was still evident but reduced in countries with higher gender equity.

"A more gender-inclusive environment as a whole removes some of the burdens on the shoulders of women to be champions of creating meaningful CSR committees," Dr Purkayastha said.

With socially responsible funds at unprecedented levels spurred on by investors wanting to do good as well as make money, the time is ripe for the finance sector to get serious about its human rights responsibilities.

Australia’s top 100 ASX listed companies are governed by boards that fail to reflect the nation’s cultural diversity and need to move ’beyond the pale’, according to a new University of Sydney Business School report.


This site uses cookies and analysis tools to improve the usability of the site. More information. |