Women’s Leadership in Climate Sustainability: Focusing on ESG Scores



Source: NariShakti

Authored by Anusha Shrivastava 

Abstract

This research article aims to prove how women’s leadership in businesses improves climate sustainability in the functioning of an enterprise. 

Climate change is a glaring reality that has managed to disrupt the lives of many by affecting health and the economy gravely. A judicious alteration of the current reckless way of living and operating has become essential. This is where climate sustainability steps in, especially as far as businesses are concerned. Bringing effective change and transparency into the climate impact caused by companies is required to ensure a sustainable future. There is enough evidence to corroborate that the uncommon presence of women in the highest leadership positions and executive boards is beneficial towards making this change. 

According to data collected from several ESG sources and think tanks, it has been used to evaluate firms’ performance when led by a woman in comparison to a man. The results show that the former gives more importance to issues factored in ESG ratings. 

Introduction

The Corporate Finance Institute says that Environment, Social and Governance (ESG) is a managerial framework to evaluate an organisation's sustainability level in its operations. Factors like pollution emitted from transportation, manufacturing, commercial buildings, etc. are some major causes of global warming caused by the business sector. In a global context ridden with an endangering climate crisis hovering above our heads, making businesses act responsibly and transparently can significantly improve our chances of building a future.

The corporate sustainability movement (CSR) was introduced in the 1990s and has since evolved into ESG, which now calls for more accountability of firms to the public and the government. ESG reporting has kept a check on companies concerning carbon footprint, social inclusion, job creation, administrative best practices, and gender equality. Despite the last point, women continue to be severely underrepresented in boardrooms. 

Body

The problem of unsustainable business practices impacting the climate and that of fewer women in top company positions are linked. The issue, however, remains that women are highly underrepresented in boards of companies. Various factors such as the lack of education, role models and pay parity in jobs caused by a history of societal discrimination.

According to a paper published by the International Finance Cooperation, an addition of women leadership in businesses is likely to increase not only its financial performance but also non-financial indicators, such as investor perceptions, and stakeholder engagement. Climate sustainability and eco-friendly procedures have become quintessential criteria for both the consumers’ and stakeholders’ perception of a company.

Another paper by authors Feng Wei, Binyan Ding, and Yu Kong observed more than 100 companies a year for eight years, from 2008 to 2015. The authors also observed that their results are particularly strong for state-owned enterprises and enterprises from heavily polluting industries. The paper’s findings reveal two connections, the first is that companies having more than 30% of the critical mass of women in business boards leads to higher ESG standards. The second is that companies with enhanced ESG perform better on critical metrics such as stronger management oversight and reduced ethical violations. 

Conclusion

There is enough evidence to prove that finances and profits are not the only factors determining a business's success. Over time, new challenges have caused the emergence of new criteria that affect the reputation and longevity of lucrative economic creations among stakeholders and consumers. Pollution and global warming, which is half the time caused by industry emissions, now ironically bear the responsibility of curtailing deteriorative practices and adopting more sustainable ones. 

These changes can only be brought through heavy initiative and leadership. Several theories with large subject bases have already indicated that female leadership could be the key to improving our conditions. Environment, Social and Governance reports are a way of recognising a company’s performance in the sustainability realm. These reports and several surveys conclusively suggest that more women leaders tend to focus on tasks such as keeping emissions and pollution levels below the limit. 

So it is safe to say that it is crucial to have more women on the company boards and top positions is a viable solution to the climate crisis. For businesses to have more responsibility and accountability, a much larger number of women should be encouraged into this realm through government policies as well as business efforts. Actual efforts at bringing more women into the business sector will eventually result in more women being in leadership positions. While concessionist government policies might not be as effective, more research and statistical coverage will prove to be more encouraging in setting these records straight. 


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Bibliography:


Peterdy, Kyle. 2022. “ESG (Environmental, Social and Governance).” Corporate Finance Institute. June 30, 2022. https://corporatefinanceinstitute.com/resources/esg/esg-environmental-social-governance/


SGA. “Top ESG Data Sources and Best ESG Data Providers 2023.” Us.sganalytics.com. Accessed December 7, 2023. https://us.sganalytics.com/blog/top-ESG-data-sources-2023/.


S.P., GLOBAL. “Women CEOs: Leadership for a Diverse Future.” Www.spglobal.com. https://www.spglobal.com/esg/insights/featured/special-editorial/women-ceos-leadership-for-a-diverse-future.


GLOBAL, S.P. “How Gender Fits into ESG?” Www.spglobal.com. https://www.spglobal.com/en/research-insights/articles/how-gender-fits-into-esg.


Private Sector Opinion. 2018. “Women in Business Leadership Boost ESG Performance.” International 

Finance Corporation, no. 42. www.ifc.org/corporategovernance.








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