The Path to Sustainability: Environmental, Social and Governance Disclosure and Gender Balance in the Board

Abstract

Our study explores the link between environmental, social and governance (ESG) disclosure and gender balance on the corporate board, the audit committee and committee on risk. Additional to finding the impact of the participation of female on the corporate board on ESG disclosure, the study further analyses the impact of women on the risk as well as the audit committee respectively on ESG disclosure. The audit committee and the risk committee play oversight functions in ensuring organisational sustainability. Extant literature on ESG and gender balance focus predominantly on the mature governance systems, leaving a gap in understanding how these relationships play out in the less mature governance system. Therefore, this study contributes to the discussions on ESG and gender balance from a varied perspective so as to provide a more comprehensive outlook of the global impact of gender balance on ESG disclosure. Using Expo facto research design, the combined environmental, social and governance disclosure index of all listed non-financial firms are captured for the period from 2012 to 2021 as well as gender ratio on the board and the risk and audit committees. Pooled ordinary least square regression is applied using the STATA version. 14.2. The study finds a positive but insignificant relationship between gender board presence, the risk, and the audit committee and disclosure of ESG. The insignificant effect could be traced to the percentage of female in the board and committees. This outcome aligns with the critical mass theory. Policymakers can therefore leverage on this outcome to design policies, which ensures a critical base of female on the board and committees in order to achieve increased ESG disclosure. A critical base of women on the board must be established. The study recommends increased number of females on the board as the presence of women on the boards and committee has shown a significant relationship. The medium through which female presence in the board impacts ESG performance and disclosure, especially in the developing economy as well as the challenges encountered in implementing gender inclusiveness on the board will provide worthy direction for further studies.