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“THERE can be no renewal of our relationship with nature without a renewal of humanity itself.”
This quote by Pope Francis highlights the need for drastic change in how societies approach environmental threats such as climate change, ocean acidification, deforestation and the loss of biodiversity. A concerted effort to preserve natural resources is required from governments, companies and individuals across the economic spectrum.
A growing body of international literature suggests that companies with gender diverse boards are better environmental stewards. Given the paucity of research in South Africa, we set out to investigate the relationship between the percentage of female directors and a number of pro-environmental policies, targets and actions among a sample of JSE-listed companies.
We also paid attention to environmental reporting and whether or not companies with more female directors were more likely to receive green awards. Data were downloaded from the Bloomberg database and other relevant websites over the period 2009 to 2015.
We found that the percentage of female directors serving on the boards of the considered companies increased from 14.29% to 18.32% over the research period. This finding is in line with the average for the 200 largest companies globally (17.3%) and statistics reported by the Businesswomen’s Association of South Africa.
The number of companies that had an environmental quality management policy, an energy efficiency policy and emissions reduction targets increased by 72%, 52% and 148% respectively over the seven-year period. Despite more companies having pro-environmental policies and targets in 2015, the absolute number of companies having such policies and targets (55, 76 and 52 respectively) is disconcertingly low.
The same applies to the number of companies that acknowledged physical and regulatory risks associated with climate change exposure in 2015 (77 and 72 respectively).
The sampled companies used less energy, generated less waste and recycled more waste over the research period. Interruptions in the national electricity supply in 2014 and 2015 could partly explain the decrease in energy usage.
Unfortunately, these companies used considerably more water and emitted more harmful gasses. The increase in water consumption is particularly perturbing, as experts claim that the country will face a national water deficit of 2 044 million cubic litres by 2025.
We observed a statistically significant positive relationship between board gender diversity and the presence of an environmental quality management policy. The sampled companies with more female directors also reduced and recycled significantly more waste than their counterparts with less gender diverse boards.
Significant positive relationships were furthermore noted between board gender diversity and the existence of emissions reduction targets in two industries which are notorious for polluting the environment, namely materials and industrials. It is encouraging to note that companies in these two industries are increasingly taking steps to reduce harmful emissions under the auspices of female directors.
A recent study by PwC shows that the mining industry has the most female directors of all local industries. The PwC report refutes the myth that boards in technical industries (such as mining, oil and gas, aerospace and construction) are inevitably dominated by men.
Our results are in line with the findings of researchers in the United States, who noted that that gender diverse leadership teams are more effective than male-dominated teams at formulating and pursuing environmentally friendly strategies. They have attributed their findings to female directors’ strong moral convictions, concerns about their firms’ green reputation and firm commitment to environmental sustainability.
We also evaluated reporting on green aspects. Using Bloomberg’s environmental disclosure score, we found that the sampled companies only slightly increased reporting on environmental policies and practices over the research period. The average annual score increased from a mere 20.70 (out of 100) in 2009 to 24.69 in 2015.
The low environmental disclosure score contradicts recent research by the Carbon Disclosure Projectwhich claims that green reporting among JSE-listed companies has increased considerably since 2007. No significant relationship was noted between the percentage of female directors and environmental reporting in this study.
Research shows that companies that excel in reducing their environmental footprint are likely to enjoy the benefits associated with a green reputation, such as attracting environmentally conscious employees, consumers and investors. To measure green reputation, we considered whether a company has received one or more green awards in a given year.
No significant relationship was, however, found between board gender diversity and environmental reputation. This finding suggests that attempts by gender-diverse boards to decrease their environmental impact are not yet fully recognised in public.
The impact of female directors was not only evident at environmental policy level in our study, but was also in actions to reduce negative business practices (such as waste generation) and strengthen positive ones (such as recycling). As women bring different perspectives on environmental management to the boardroom, companies should give more attention to the development of talented female candidates.
We agree with editor and reporter Ainslie Chandler who argued in Bloomberg Brief, Sustainable Finance (2016) that “if we keep asking the same people [i.e. male directors] the same questions and they keep coming up with the same answers, we are not going to make the transition to a de-carbonised [green] economy very well”.
Companies should also pay more attention to sustainable water management. We are facing severe water shortages and failure to address this pressing environmental challenge will have grave consequences for all South Africans.
*Professor Suzette Viviers and Dr Nadia Mans-Kemp are academics in the department of business management at Stellenbosch University.
