Board gender diversity and ESG performance with evidence on sustainability committees

In this paper, we examine whether board gender diversity improves firms’ ESG performance using an unbalanced, multi-country panel of listed firms spanning 2010–2021. ESG is operationalised via Refinitiv/LSEG composite scores that aggregate category-level indicators with sector-sensitive weights and controversy adjustments. The focal regressor is the percentage of women on the board at fiscal year-end; for construct validity, we also employ the Blau and Shannon diversity indices. Specifications include governance controls (board size, independence, skills, sustainability committee) and financial controls (profitability, leverage, asset structure). To limit the influence of outliers on evolving scales, continuous variables are winsorised at the 1–99% level by year. We start with OLS models featuring year and sector fixed effects and firm-clustered errors, then sequentially add governance and financial blocks and country dummies. To address unobserved heterogeneity and cross-sectional dependence, we proceed to panel estimators: firm fixed effects with two-way clustering, random effects as a reference, feasible GLS with heteroskedastic panels and AR(1) disturbances, and fixed effects with Driscoll–Kraay standard errors. Finally, we estimate dynamic specifications using System-GMM with collapsed instruments, reporting AR(2) and Hansen tests and capping instrument counts. Across designs, board gender diversity is positively and significantly associated with higher ESG scores; effects remain when using Blau and Shannon indices, when lagging diversity to ease simultaneity, and in a pre-COVID subsample. Sustainability committees also load positively, and pillar tests point to environmental process channels. The study contributes updated measurement, stronger identification, and construct checks, and it implies that board refreshment and committee architecture help translate diversity into better ESG outcomes.