In this article on gender diversity on boards, I would like to dive into the effect of gender diversity on how a company values and engages CSR. I also will explore why board gender equality increases CSR and the immense value that women bring to the table.
The research supports that as gender diversity increases among key decision-makers, the C-suite and corporate boards, the number incidence of engagement of CSR increases, as does the quality of each engagement and the amount of financial resources devoted to these initiatives. In short, CSR moves from being a quaint notion about doing nice things to being understood as meaningful to the culture of the company when the number of women in decision-making roles increases.
A 2010 research paper from the Electronic Journal of Business Ethics and Organization Studies found that there is clearly an association between the number of female directors on a corporate board and the incidence of corporate social behaviour.
Building on this research, in 2015, researchers published an important study in the Journal of Business Ethics. They found that board diversity is positively associated with CSR performance and that board diversity significantly increases CSR performance by increasing CSR strengths and reducing CSR concerns. This was a massive study that was conducted over 12 years looking at almost 1,500 American firms. A similar finding was reached in 2015 in the Journal of Corporate Social Responsibility Environmental Management. That study concluded that “when the number of women on the board increases, firms act with greater social responsibility.”
As I noted in my first article, earlier research from Catalyst had established that companies with the highest representation of women leaders financially outperform, on average, companies with the lowest. New data from researchers at Catalyst and Harvard Business School indicates that gender-inclusive leadership and corporate social responsibility are clearly linked. They found that companies with more women board directors and corporate officers contributed significantly more charitable funds on average than companies with fewer or no women in senior roles. In line with previous research, the study supported the fact that gender-inclusive leadership is associated with increased engagements of CSR and higher contribution levels.
It is important to note that these higher contribution levels are demonstrably linked to having more women in senior leadership roles and not merely to the size of a company’s budget. The researchers found that while controlling for key factors that might influence donation levels, such as a company’s overall financial performance, size and industry, the presence of women leaders still had a significant positive impact on a company’s CSR levels.
This study also indicates that companies with more women leaders are not only more committed, on average, to CSR, but they may also be better at it, in the sense that such companies are likely to develop higher-quality CSR initiatives.
[strong]Why is this happening? Because women are awesome, dummy!
As is often the case, one answer leads to another question. One must ask, “Why does boosted gender diversity on boards increase the level and quality of CSR?”
Aside from the obvious that women are awesome, what do women specifically bring to the table? The simple answer to that is “a whole heck of a lot!” According to the Journal of Corporate Social Responsibility ," target="_blank"]Environmental Management, women on boards and in the C-suite tend to bring a number of skills on which male-only boards often don’t do as well. Women:
• improve relations with stakeholders;
• increase accountability;
• prompt more ethical behaviour; and
• allow some organizations to show greater concern for the environment
Let us not misread the research. Women do not only bring these skills, they maintain the important economic and fiscal analysis of a prudent leader as well. The overarching message here is that women tend to bring balance to leadership and to a company's scope and areas of focus. The research concludes “the different skills and approaches of men and women to solving the problems of firms, are of great value to guarantee a balanced focus in the economic, environmental, and social field . . . ”
In my final article in this series promoting women on boards, I will evaluate some tools to help advisors and influencers engage decision-makers to get them on board with gender diversity and inclusion within their own ranks. Solutions, however, often lead to additional dilemmas. Once you get what you wish for and decisions-makers say, “that’s a great idea,” what do you do then? I will also provide some concrete strategic tools you can begin implementing immediately to bring greater gender equality to your board and C-suite.