How women in leadership improves your ESG

Wednesday 13 November 2024

By Gillian McKee, GIRAFFE Associates Ltd.
Winner, Women in Business Best (Small) Green Business Award, 2024.

I’ve always made a tacit assumption that companies with women in leadership roles are more likely to care about issues like sustainability, but it was only when I started to look into the topic in preparation for Women in Business’s Voices of Leadership Conference that I realised just how much evidence there is out there to support my beliefs.

Women care more about the world

Thanks to research from Mintel, we’ve known for some time that there’s an ‘eco gender gap’ – that women take more care than men when it comes to things like recycling, conserving water and conserving energy. You might wonder why that is, but really, given the role of women in society throughout history, it’s not surprising that we take more care and responsibility for our planet. It’s hard-wired into many of us to be carers, to nurture, to empathise and to take on the lead role in running our home and family life, even as we juggle that with building our career.

Whether you embrace or bristle at the idea that our gender makes us more caring, there is plenty of evidence to support that supposition when it comes to our attitude to environmental and social issues. Companies would do well to take note of this fact and value women’s perspective more as they struggle to thrive in an increasingly volatile and unpredictable world.

Why does that matter?

Businesses today face growing pressures from all quarters to address environmental, social and governance (ESG) concerns while remaining competitive. Innovation is critical to remain relevant in a fast changing world, and research carried out by Accenture found that in organisations where men and women are treated equally, innovation is six times higher.

Further, in the Women as Levers of Change research carried out by FP Analytics to explore the differences women make in traditionally male-dominated ‘legacy’ industries such as construction, energy, mining and utilities, there was a clear positive correlation between women’s representation on boards and corporate performance on ESG matters. In the research, companies with improved gender diversity on boards were 60% more likely than those without to reduce the intensity of energy consumption, 39% more likely to reduce greenhouse gas emissions intensity and 46% more likely to reduce water intensity. These companies also had a 74% higher improvement on social responsibility issues such as labour rights, gender equality and impact on local communities.

Closer to home, in my role as an assessor for Business in the Community’s CORE Standard for Responsible Business, I recently visited a local company that has appointed a female Chair to its Board in the three years since its last assessment and the difference I saw in commitment towards investing in local communities and wider societal issues, was notable.

Put simply, companies dominated by males may be financially profitable and highly competitive and until now that’s been enough, but things are changing. Investors now recognize the benefits of diversity and gender diversity in particular, and given the growing focus on sustainability and the need to take stock of environmental and social impact, profits alone no longer cut it.

That said, in the Women as Levers of Change report, companies with the highest percentage of women in executive management roles were also shown to be 47% more profitable, so it’s a win for the business, the planet and society to have more female leaders.

Five reasons why women leaders will boost your ESG

In summary, here are five reasons why it makes sense to develop women leaders and how doing so is an investment in a sustainable future.

1. Enhanced risk management

Women leaders tend to be more cautious and strategic in risk assessment, crucial for managing ESG risks. Their approach includes long-term planning and a broader focus on stakeholder impacts, which aligns well with ESG goals. Across the Board Improvements: Gender Diversity and ESG Performance

2. Improved environmental focus

Female executives are often associated with stronger environmental governance. Research shows that companies with female board members are more likely to adopt renewable energy practices and reduce carbon emissions. Female directors boost sustainability

3. Greater commitment to corporate responsibility

Women in leadership frequently advocate for better working conditions, diversity, and community engagement. This commitment supports the "social" pillar of ESG and improves employee satisfaction and brand reputation.

4. Higher Governance Standards

Female leaders often excel in governance, promoting transparency, accountability, and ethical decision-making. This strengthens corporate governance frameworks and boosts investor confidence.

5. Long-term value creation

Companies led by women are more likely to pursue sustainable business strategies that drive long-term value rather than short-term returns. This approach is attractive to ESG-focused investors and can lead to more stable financial performance and is also critical in tackling one of the biggest issues facing humanity today – climate change.

So, do we need more ESG roles for women?

Let’s agree for the purposes of this piece that ESG is (sort of) an evolution of CSR (corporate social responsibility). In my two decades of experience with Business in the Community, females led the way on driving corporate social responsibility in most organisations and most of our main contacts in member companies were women.

Their roles were often either HR or marketing roles with corporate social responsibility (CSR) tagged on, and rarely was there a dedicated senior role with sustainability or ESG in the title, but I have noticed that changing.

A growing number of companies here do now have a dedicated Director of Sustainability role (or similar), though few that I’ve come across are female at Director level. The picture is a little different among larger corporates however and in recent years, as the role of Chief Sustainability Officer has become more commonplace, women now hold more than 50% of those roles globally.

What’s interesting though, is that it’s often the female leaders in Board or Executive roles that have the biggest influence when it comes to embedding ethical practices, rather than those in a dedicated sustainability role. Perhaps then it’s the leadership styles and behaviours demonstrated by women that we need to focus on and nurture rather than their job role.

S&P Global's report on women CEOs and diverse leadership for sustainability notes that female leadership styles, often characterised by empathy and inclusivity, have been shown to foster more equitable and sustainable workplace cultures. It also suggests that companies with women leaders are more adaptable to changing workplace dynamics and societal expectations, which are increasingly integral to strong ESG outcomes.

How do we capitalize on this?

With so much evidence of the benefits of female leadership, you might wonder why in 2024 we’re still so under-represented at senior levels. Globally, women hold only 23.3% of board seats, 6% of CEO, and 17.6% of CFO positions. In Northern Ireland, around 13.5% of companies across all sectors are led by women – the lowest proportion across all UK regions.

Mentoring, role modelling and maintaining the focus on diversity and inclusion initiatives in the workplace are all key to ensuring that women continue to rise to positions of leadership where they can assert a positive influence on vital ESG issues such as climate change, supply chain transparency and ethical conduct.

The SistersIN initiative championed by many employers is a great example of a positive mentoring initiative that helps to empower female pupils to become the leaders of tomorrow. We need more of these types of projects and within workplaces we need more appreciation of the value women bring with their ‘caring’ leadership behaviours.

Locally, women leaders like Vicky Davies of Danske Bank and Sara Venning of NI Water are high profile role models who both demonstrate a commitment to ESG issues in interviews and in their business decisions. Notably, both have also won awards for their leadership in the last year or so and Vicky is the current chair of responsible business membership organisation Business in the Community NI.

Ultimately though, we need to stop viewing caring about social and environmental issues as somehow ‘soft’ and recognise the importance of these issues for business success today as well as vital for a sustainable future. And we need to harness and support the leaders who ‘get’ this and are leading their organisations with purpose – whatever their gender.

If you’d like to discuss your business’s needs when it comes to embedding sustainability or reporting on your ESG, please reach out to see how GIRAFFE Associates could help.

Wednesday 13 November 2024