Social Responsibility Journal: Article Information

Social Responsibility Journal
Women in the boardroom and their impact on climate change related disclosure
Mohammed Hossain, Omar Al Farooque, Mahmood Ahmed Momin, Obaid Almotairy,
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Mohammed Hossain, Omar Al Farooque, Mahmood Ahmed Momin, Obaid Almotairy, "Women in the boardroom and their
impact on climate change related disclosure", Social Responsibility Journal, https://doi.org/10.1108/SRJ-11-2016-0208
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Women in the boardroom and their impact on climate change related
disclosure
Abstract
Purpose - This paper aims to investigate the relationship between gender diversity and the
Carbon Disclosure Project (CDP) score/index. Specifically, the study describes extant
research on theoretical perspectives, and the impact of women on corporate boards (WOB)
on carbon emission issues in the global perspective.
Design/methodology/approach - This study uses the carbon disclosure scores of the Carbon
Disclosure Project (CDP) from 2011 to 2013 (inclusive). A total observation for the three
year periods is 1175 companies. However, based on data availability for the model, our
sample size totals 331 companies in 33 countries with firms in 12 geographical locations. We
used a model which is estimated using the fixed-effects estimator.
Findings -The outcomes of the study reveal that there is a positive relationship between
gender diversity (WOB) and carbon disclosure information. In addition to establishing a
relationship between CDP score and other control variables, this study also found a
relationship with Board size, asset size, energy consumption, and Tobin’s Q, which is
common in the existing literature.
Research limitations/implications -The limitations of the study mostly revolve around

samples and the time period. To further test the generalizability and cross-sectional validity
of the outcomes, it is suggested that the proposed framework be tested in more socially
responsible firms.
Practical implications -There are increasing pressures for WOBs from diverse stakeholders,
such as the European Commission, national governments, politicians, employer lobby
groups, shareholders, Fortune and FTSE rankings and best places for women to work lists.
The study offers insights to policy makers implementing gender quota legislation.
Originality/value -The study has important implications for putting into practice good
corporate governance and in particular, gender diversity. The outcomes of our analyses
advocate that companies that included women directors and with a smaller board size may
expect to achieve a higher level of carbon emission performance and to voluntarily disclose
the level of carbon information assessment requested by the CDP.
Keywords Climate change, Carbon disclosure project, GHG, Corporate social

responsibility, Women on corporate board
Paper type Research paper
1. Introduction
1
There is growing scientific evidence that carbon emissions are the major cause of global
warming, which is a serious threat to the quality of human lives (Lash and Wellington, 2007;
Allen et al., 2009; Luo, et al., 2012; Luo and Tang, 2014a; Luo and Tang, 2014b). According
to the Intergovernmental Panel on Climate Change (IPCC), average temperatures have
already risen by 0.850C since 1880 (Luo and Tang, 2016). We are expected to experience
significant increases in surface temperatures and atmospheric CO2 concentrations. In
addition, sea levels are projected to rise between 26 and 81 centimetres by 2100 (IIPCC,
2013). Therefore, corporations are expected to play an important role in stabilising climate
change and in the control of greenhouse gas (GHG) emissions (interchangeably use the terms
as ‘carbon’, ‘carbon dioxide CO2’). This is essential for sustainable corporate development.
Therefore, there is a growing demand for carbon-related information (Organisation for
Economic Co-operation and Development [OECD], 2010; Rankin et al., 2011; Luo and Tang,
2016). A variety of actions have been taken around the world to deal with GHG emissions.
Some examples are the European Emissions Trading Scheme (EU ETS), the Kyoto Protocol,
Australian Emissions Trading Scheme (AETS) and Carbon Disclosure Project (CDP).
This study explores the impact women on the corporate board of directors have on climate
disclosure. It uses CDP’s, a nongovernmental and not-for-profit organization, ‘carbon-related
disclosure score (CDS)’ in determining the extent to which global companies proactively
address the climate change agenda and whether board diversity has a positive impact on this
reporting process. The importance of this study derives from competing views such as
women on corporate board can bring distinctive management style to improve board’s
effectiveness, or women’s limited experience in leadership positions could have negative
effect for board’s work practices (Nielsen and Huse, 2010). The strategic decision-making
literature recognizes the composition of boards of directors as an important factor in
corporate decision making (Post et al., 2011; Fuente et al., 2017). Surveys have revealed that
2
a significant majority of board members view their role as determining the strategic direction
of the company (Demb and Neubauer, 1992). The role of women in board positions is also
receiving increased attention in recent decades (Daily et al., 1999; Hillman et al., 2007;
Terjesen et al., 2009; Nielsen and Huse, 2010; Fernandez-Feijoo et al., 2014; Ben-Amar et
al., 2015; Liao et al., 2015; Hoang et al., 2016). The literature has shown that women usually
have a higher perception of risks and have been socialised to care for the needs of others.
Based on these qualities, they have a closer feeling towards social responsibility (Ciocirlan
and Pettersson, 2012). Women are also more likely to provide socially desirable responses
and to be more sensitive to ethical issues than men (Bernardi, 2006). In order to understand
the effect that women have on boards, it is important to consider not only their presence, but
also their number. Given this fact, researchers (Prado-Lorenzo and Garcia-Sanchez, 2010;
Lio et al., 2014; Ben-Amar, et al., 2015) have examined the effect of gender diversity on
GHG emissions disclosures with mixed results.
For example, Prado-Lorenzo and Garcia-Sanchez (2010) do not find any effect of gender
diversity in the boardroom on GHG disclosures based on a sample of 283 companies for the
CDP 2008 project. In contrast, Liao et al. (2014) report a positive effect of female presence
on 2010 carbon disclosures in the United Kingdom (UK), and Ben-Amar et al. (2015) find
that female boardroom participation is positively related to the voluntary disclosure of
climate change information based on a sample of Canadian firms over the 2008–2014 period.
They also reveal that board gender diversity with more than two women directors influences
board disclosures on GHG emission levels and climate change strategies. However, our study
is different from the previous three studies with regards to the extended sample and global
perspective. It, therefore, contributes to the understanding of whether women can influence
the board by addressing current climate change risk issues as pressures come from different
3
stakeholders such as regulatory authorities, policy makers, international organisations and the
media.
This study contributes to the literature on board diversity and climate change risk discourse in
several ways. First, we analyse the relationship between female representation on corporate
boards and CDP scores from an international context covering 33 countries, since it is the
firm’s decision to voluntarily disclose climate change related risk information and
opportunities that have been requested by CDP as an institutional stakeholder. Institutional

investors are actively seeking change on board diversity and climate change disclosure.
Therefore, they need to explore how board gender diversity may shape corporate response to
institutional investors’ demands for increased public reporting about climate change risks
(Ben-Amar et al., 2015). This is important because GHG emissions and public disclosure to
investors can be assumed as a first step toward addressing climate change issues and reducing
the company’s carbon footprint (Hoffman, 2005; Kolk and Pinkse, 2007; Reid and Toffel,
2009; Bocken and Allwood, 2012). Although Ben-Amar et al. (2015) examine this issue in
the sample of 541 Canadian firms, our investigation is not limited to a specific country. By
contrast, our study of climate change is global in nature.
Second, the study emphasises that an effective diversified board is necessary to address issues
raised by various stakeholders in relation to climate change risk disclosure. This concept
contributes to the corporate governance literature since we investigate firm level board
diversification. Corporate governance mechanisms encourage firms to disclose voluntary
information about carbon emissions. From a study of global companies and different
economic environments, it is imperative to observe whether corporate governance
mechanisms address carbon emission disclosure and to what extent they do this. Third, our
paper also contributes to the voluntary disclosure literature on climate change disclosure
scores by CDP rather than general sustainability disclosures. The CDP data are derived from
4
a set of complete questionnaires (Luo et al., 2012), while sustainability disclosure data relies
on annual reports, sustainability reports, environmental reports and company websites (Post
et al., 2011; Fernandez-Feijoo et al., 2014; Seto´-Pamies, 2015). The CDP report is a stand-
alone carbon statement that requires the company to provide comprehensive and specific
carbon information (Luo and Tang, 2014). In the absence of internationally accepted
standards, the CDP has adopted a set of rules that participating firms must follow and thus
significantly reduces the opportunity for managers to manipulate carbon data (Luo and Tang,
2014). Finally, the findings of the study may contribute to the understanding of regulators and
policy makers about taking steps forward in accommodating women directorship in the board
and to what extent. This will provide firms with direction, either mandatorily or voluntarily
to include women in the board of directors. For example, in the UK, FTSE 100 boards should
aim for a minimum of 25% female representation by 2015. The European Commission has
set a 40% target for female representation by 2020, while the Australian ASX Corporate
Governance Council recommends that companies establish a policy concerning diversity and
disclose in their annual reports, the proportion of women in the whole organisation, in senior
executive positions and on the board (Ben-Amare et al., 2015).
Within this context and based on the discussion above, the present study develops the
following hypotheses in terms of management’s motivation about carbon emission disclosure
and the strategies to deal with climate change in response to the CDP survey. This study uses
the lens of gender to explore the role of director preferences in the selection of corporate
strategies with regard to corporate climate change risk issues.
2. Theoretical orientations
The social responsibility of businesses has been influenced by various theories (Carroll and
Buchholtz, 2000). In this study, we have developed our theoretical orientations in the lens of
corporate governance and diversity as well as stakeholder theory and resource dependence
5
theory. In other words, we need to explore how diversity especially on the number of women
on boards contributes to corporate governance mechanism and also how it reflects to the CDP
score. In recent years, corporate governance reforms emphasise diversity in boardrooms
(Davies Report, 2015; European Commission, 2014; Higgs Report, 2003). Also increased
demand for gender diversity on boards has led researchers to examine the factors which
influence the presence of women directors in the boardrooms (Saeed et al. 2016). The
presence of female directors on boards can reinforce mechanisms of stakeholder engagement

(Al-Shaer and Zaman, 2016) and increase the credibility of corporate reports (Manetti and
Toccafondi, 2012).The arguments for increasing the number of women on boards can be
grouped into three categories: theoretical, moral and business arguments (Walt and Ingley,
2003). In terms of theoretical arguments for board diversity are based on the question of
whom the board should report to, whose interests it protects and by whom the board can be
held accountable (Lückerath-Rovers, 2009), which include agency theory (Jensen and
Meckling, 1976), stakeholder theory (Freeman, 1984), resource dependence theory (Pfeffer
and Salancik, 1978) and stewardship theory (Donaldson and Davis, 1991).
The above theories have different approach on the role of the board (monitoring versus
advice, shareholders versus stakeholders), and the importance of the independency of
directors. So, diversity is argued to improve independency while people with a different
gender, ethnicity or cultural background might ask questions. Therefore, gender is argued, as
one of the most-debated diversity issues in the corporate governance literature, and, given
that women are expected to offer value that is different from that of men, numerous calls
have been made to increase the number of women on boards (Singh et al. 2008; Terjesen et
al. 2009) be posed by directors with more traditional backgrounds (Carter et al., 2003).
Regarding moral argument, it is based on the social responsibility of companies and their
boards such as being a good corporate citizen (Walt and Ingley, 2003; Lückerath-Rovers,
6
2009; Carroll, 1991, Galbreath, 2016). The moral obligations of businesses to society begin
with its obligations to uphold the perfect rights afforded in its stakeholder relationships
(Brown and Forster, 2013). Carver (2002) argues that the rationale for diversity in the
boardroom lies within the concept of ownership and the [moral] obligation of boards in their
stewardship role. Representing ownership requires that a board represent the diversity within
the ownership (Walt and Ingley, 2003). According to Carver (2002), in the bracket of
humankind and human opinion in the ownership to find its way into governance, which
constitute the board to be a reflection of the ownership as social justice is a dominant
governance value. Thus, the stakeholder theory has grown into a theory for both corporate
governance and corporate social responsibility (Kaptein and Wempe, 2002, Walt and Ingley,
2003. Finally, the improvement of company performance is used as a business argument for
diversity. Diverse groups consider a greater range of perspectives and generate more high-
quality solutions. This could ultimately lead to higher company performance and company
value (Burgess and Tharenou, 2002; Singh and Vinnicombe, 2004; Kang et al., 2007).
Lückerath-Rovers (2009) argue that both stakeholder theory and resource dependence theory
question who should serve on corporate boards in order to give the board legitimacy, and to
what extent this contributes to corporate governance and thus, a brief discussions on
theoretical orientations is made in the following paragraphs.
2.1 Stakeholder theory
The underlying rationale behind GHG emission disclosures has been enunciated under
various socio-political and non-social political theories (Patten, 2002), of which stakeholder
theory is particularly appropriate. Researchers advocate that stakeholder theory is
fundamental to the study of business and society (Galbreath, 2016; Liao et al., 2015;
Clarkson, 1995; Donaldson and Preston, 1995; Freeman, 2014). Stakeholder theory is based
on the premise that an organisation has many stakeholders rather than a single group of
7
shareholders, or groups of financial stakeholders, such as creditors (Momin, 2013). As an
organisation needs to manage its relationship with many stakeholder groups that affect, or are
affected by, its business decisions (Clarkson, 1995; Freeman, 1984), therefore, such
relationships produce different arguments, leading to a number of variations of the
stakeholder theory (Momin, 2013). The literature discusses three main variants of stakeholder
theory: a normative (ethical), a managerial (instrumental) and the descriptive versions.
(Donaldson and Preston, 1995; Jamali, 2008). The normative variant suggests that
management might address stakeholder concerns from an accountability perspective, the
instrumental and descriptive variants suggest that businesses might manage powerful
stakeholders strategically by identifying them with the self-interest of the business
(Donaldson & Preston, 1995; Momin, 2013). Within the stakeholder model, several groups of
stakeholders have expressed their concern about the absence of women board directors
(Hillman et al., 2007). Moreover, Al-Shaer and Zaman (2016) argued that female directors
are more likely to be stakeholder oriented, concerned about ethical practices and socially
responsible behaviour and also be inclined to take actions to reduce perceived risks (Adams
and Ferreira, 2009; Carter et al., 2003). They find that gender diverse boards are associated
with higher quality sustainability reports. Nielsen and Huse (2010) also argued that women
on board can reduce the level of conflict and ensure high quality of board development
activities and strategic decision.
In the context of this study, Liao et al. (2015) argue that “GHG emissions are ubiquitous and
persistent, and the climate-change legislation may influence a firm either directly or
indirectly, and favourably or unfavourably” (p. 412). Authors also argue that in order to have
far-reaching impact on their future development, firms must make strategic decisions. The
extent of a company’s social disclosure depends on its social performance (Ullmann, 1985).
In this case, social performance refers to an organisation’s responses to anticipated or existing
8
social demands (Strand, 1983). Managers continually encounter demands from multiple
stakeholder groups to devote resources to corporate social responsibility (McWilliams and
Siegel, 2001). Hence, stakeholders need to be managed to maintain their continued support
and ultimately ensure that corporate objectives and strategic decisions are taken which
consider existing social demands as well as recognize the relevance of multiple stakeholders
(Donaldson and Preston, 1995; Mitchell et al., 1997; McWilliams and Siegel, 2001).
Therefore, this implies that companies have identified their target audience and are providing
information that will influence (or distract from) this group (Gray et al., 1996). Moreover, it
is argued that organizations could not survive if they were not responsive to the demands of
the groups in their environments, who are thus enabled to influence organizational outcomes
(Pfeffer and Salancik, 1978). In this case, women are more sensitive to social and ethical
issues (Bear et al., 2010; Hafsi and Turgut, 2013; Isidro and Sobral, 2015; Al-Shaer and
Zaman, 2016). It is thus likely that due to females’ higher concerns for social responsibility
issues and greater stakeholder orientation a gender diverse board may affect sustainability
reporting quality (Al-Shaer and Zaman, 2016, p. 212) which might have positive impact in
the CDP project.
2.2 Resource dependence theory
Resource dependence theory offers the rationale for the board’s function of providing critical
resources to the firm including legitimacy, advice, and counsel (Hillman and Dalziel, 2003).
These board resources offer the corporation support in understanding and responding to its
environment (Boyd, 1990) that can help it better manage CSR issues (Bear et al., 2010).
Moreover, resource dependence has two major implications regarding boards of directors.
First, composition of the board should be affected by environmental pressures and demands.
Second, differences in board composition should affect a firm’s performance (Boyd, 1990).
As we are concerned in this study environmental issue, i.e. climate change, therefore, our
9
discussion is limited to the first concern. Indeed, from the perspective of resource dependence
theory, the board of directors is a primary linking mechanism for connecting a firm with
external resources (Hillman et al., 2007). In addition, as per stakeholder model, the board of
directors might be a linking mechanism for connecting a firm with external stakeholders
(Lückerath-Rovers, 2009).
In the context of resource dependence theory, using the board of directors as a linkage
mechanism towards stakeholders provides companies with at least four benefits (Pfeffer and
Salancik, 1978, p.145): firstly, linkage may provide the organisation with useful information,
secondly, linkage provides a channel for communication purposes, thirdly, linkage is an
important step in obtaining commitments of support from important elements of the
environment and fourthly, linkage has a value in legitimizing organisations (Lückerath-
Rovers, 2009). Hillman et al., (2007) add that legitimacy and conformity to societal
expectations are considered key components of organisational survival.
In this study, the focus will be on the fourth benefit of board linking: providing legitimacy to
an organisation. Resource dependence argues that external pressures- such as competition,
regulation, and social forces-will cause firms to seek out environmental linkage which is
measured by board size (Boyd, 1990). In this case, CDP scores might have influence from the
board’s role as corporate boards do respond to environmental pressures and demands.
Moreover, board’s influence on CSR is facilitated by the activities of monitoring and support
(Hillman and Dalziel, 2003), which are dependent upon specialised human capital resources.
Therefore monitoring at the board level is an activity that requires the oversight of
management, corporate resources, and firms’ outcomes. However, effective boards do more
than monitoring; they also advise. Their advice can assist management to make high-quality
decisions (Hillman and Dalziel 2003). The presence of women directors has been linked to
various outcomes and having women on boards does exert some influence on non-financial
10
performance and in particular CSR (Stanwick and Stanwick 1998; Wang and Coffey 1992;
Williams 2003; Bernardi and Threadgill, 2010; Smith et al., 2001; Siciliano, 1996). In
addition, women are more oriented toward supporting and maintaining relationships than men
(Hisrich and Brush 1984), are strong in the areas of idea generation and innovation (Rosener
1995), and have been noted as having higher moral and ethical atonement than men (Betz et
al. 1989). Therefore, women through their specialised human capital, bring a high level of
skill at idea generation and innovation (Triana et al., 2013; Torchia et al. 2011), both of
which would be expected to help boards to make appropriate and necessary decisions to
improve CSR. Here, the resources offered by women are expected to help boards, enabling
them to innovate more readily around CSR initiatives. The resources of women on boards are
also expected to be engaged to carefully consider and respond to stakeholders who have
varied interests in the firm, such as environmental and social interests (Galbreath, 2016).
2.3 Agency theory
Based on Jensen and Meckling (1976)’s agency theory, Barnea and Rubin (2010) consider
CSR engagement as a principal-agent relation between managers and shareholders (Li et al.,
2016). Moreover, agency theory explains how principals efficiently organise exchanges with
agents by employing mechanisms - incentive alignment and monitoring - in appropriate
combinations (Eisenhardt, 1989; Jensen & Meckling, 1976) and also hold their organisations
to higher ethical standards (Pan and Sparks 2012). However, in order to avoid the agency
conflict, the management should avoid the cost of dealing with environment problems,
namely, reducing high-energy consumption, activities to reduce GHG emission, and air and
water treatment before being released to the environment (Terjesen et al., 2016). In other
words, agents or the firm management would carry out such activities to benefit them,
however, in return, it will be at the cost of the shareholders. Firms need to take up activities
and initiatives to tackle the known global warming issues and impose solutions to minimize
11
the impact on the environment (Amran et al., 2014). Climate change disclosure is one way of
providing evidence, which can increase the confidence of the stakeholders. Therefore, the
firms should use sustainability reporting to publicise to stakeholders that individual firms are
undertaking activities to curb global warming issues (Amran et al., 2014). Hence, to mitigate
the agency dispute between the agent and principal, additional disclosure in reporting will
ease the increasing concern. It is the firms’ duty to handle the climate change issue in a more
professional manner to avoid an unfavourable image and legal expenses, (i.e. agency cost).
There is evidence that boards with more women have greater levels of public disclosure (Gul
et al. 2011) and research supports that women’s ability to influence board decisions increases
with their numbers, particularly boards with more than one woman (Fondas and Sassalos
2000).
2.4 Discussion on theoretical underpinning
The above discussion leads us to posit that the CDP’s score may be affected by the gender
diversity on board under the umbrella of above theories. It is also noted that the current
literature emphasises the importance of carbon relevant risk disclosure of firms given the
planetary boundaries, which are perceived as resource scarcity (Deegan, 2002; Parker, 2005;
Islam and Deegan, 2008; Liao et al., 2015: Guenther et al., 2016). Therefore, it is useful for a
firm to be held accountable to the relevant stakeholders who have a stake in knowing how the
resources entrusted to a firm are used (Schaltegger and Burritt, 2000), to obtain a “contract to
continue its operations” (Deegan, 2002, p. 293). Guenther et al., (2016) discuss another issue
of ‘stakeholder salience’ (Neville et al., 2011) in explaining stakeholder relevance in relation
to carbon disclosure. Eesley and Lenox (2006, p. 765) define salience “in terms of whether
firms are likely to respond to stakeholder requests for action and by proposing that power,
legitimacy, and urgency arise out of the nature of stakeholder–request–firm triplets”. Carbon
disclosure is a way of satisfying salient stakeholders and reflects an adaptive management
12
approach to address a dynamic, multidimensional environment, and an ability to meet social
pressure and respond to societal needs (Hackston and Milne, 1996). Moreover, Liao et al.
(2015) argue that agency and legitimacy theories, although widely applied, are inadequate to
explain GHG-reporting phenomena. Therefore, in this context, stakeholder and resource
dependence theories are a more valid theoretical perspective, because the preferences of one
interest group with regard to climate-change activities may not be congruent with those of
other groups (Liao et al., 2015). Indeed, stakeholders are a common antecedent, moderator or
mediator variable (Guenther and Hoppe, 2014) in the related research field of corporate
environmental (carbon) disclosure (Clarkson et al., 2008; Huang and Kung, 2010). On the
hand, within the framework of resource dependence theory, women on board brings
specialised human capital (Miller and Triana, 2013) and help board to address the
environmental concern with particular in climate change risk issue in the CDP project.
3. Related literature and Hypotheses development
The CDP has made significant contributions in obtaining greater corporate disclosure of risks
related to climate change (McFarland, 2009). Its voluntary efforts encourage standardised
voluntary reporting for companies to provide investors with relevant information about
climate change-related business risk (Kolk et al., 2008). The intention to provide this climate
change-related business risk information depends on the board of directors since it is a
company’s main governance body and acts the entity responsible for safeguarding the
interests of the stakeholders in the company by carrying out its duties (Hill and Jones, 1992;
Prado-Lorenzo, and Garcia-Sanchez, 2010).
3. 1 Gender diversity
Diversity is a characteristic of an organization’s board of directors, which is related to the
existence of differences in its members’ traits (Prado-Lorenzo and Garcia-Sanchez, 2010).
Gender diversity is one of the more interesting human aspects that has been the focus of
13
many studies (Willims, 2003; Nalikka, 2009; Lückerath-Rovers, 2009; Adams, and Ferreira,
2009; Post et al. 2011; Bear et al., 2010; Fernandez‐Feijoo et al., 2014; Al-Shaer and Zaman,
2016; Chen et al., 2016; Galbreath, 2016; Liao et al., 2015; Rao and Tilt, 2016; Saeed et al.,
2016). This is because diversity among board directors improves the chances that different
knowledge domains, perspectives and ideas will be considered in the decision-making
process (Post et al., 2011; Liao et al., 2015). The board of directors is primarily responsible
for monitoring the behaviour of management (Fama and Jensen, 1983). Board directors are
also participating more actively in decision making about corporate environmental policies
(Kassinis and Vafeas, 2002). Boards influence firm performance (Peng, 2004), strategic
decision making (Golden and Zajac, 2001; Jensen and Zajac, 2004; Westphal and
Fredrickson, 2001), internationalization strategies (Datta, et al., 2009), R&D investment
strategies (Kor, 2006), share price (Filatotchev and Bishop, 2002), CSR (Frias‐Aceituno et
al., 2013; Post et al., 2011), sustainability reporting (Amran et al., 2014; Al-Shaer and
Zaman, 2016) and corporate governance (Farber, 2005; Monem, 2014).
Board gender diversity could improve the quality of board discussions and increase the
ability of the board to provide better oversight of the firm's disclosures and reports. It could
also reduce board effectiveness by increasing internal divisiveness and constraining its ability
to act (Gul et al., 2011). The study of Lückerath-Rovers (2009) indicate that the presence of
female directors on company boards provides legitimacy to the outside world regarding the
company’s values on diversity. Saeed et al. (2016) observe that board gender diversity is
positively related to the firm size, and it is inversely related to corporate risk across both
emerging and developed economies. Galbreath (2016) suggests based on secondary data from
Australia’s largest firms that the resources of outsiders and women on boards appear to
complement each other in impacting on CSR. Al-Shaer and Zaman, (2016) find that gender
diverse boards are associated with higher quality sustainability reports and independent
14
female directors have greater effect on sustainability reporting quality than male directors.
Chen et al. (2016) suggest that female directors improve board effectiveness in risk
management with respect to R&D investment. Rao and Tilt (2016) observe that board
composition seems to be a major factor which can be assumed to have some influence on
both CSR activities and CSR reporting. The study of Bear et al. (2010) extends current theory
by demonstrating that the number of women on the board has a positive relationship with the
strength ratings for CSR. Saeed et al. (2016) note that board gender diversity is positively
related to the firm size, and it is inversely related to corporate risk across both emerging and
developed economies.
There are also differences in the company board of directors’ decision making, including
CSR policies, due to its gender composition (Fernandez‐Feijoo et al., 2014). Introducing
gender diversity to corporate boards also has important implications for board dynamics
(Ruigrok et al., 2007). Women bring different characteristics to boards where they are
perceived to have a more participative, democratic, and communal leadership style (Eagly et
al., 2003; Eagly and Johnson 1990; Rudman and Glick 2001). This may lead to improve
board effectiveness as a result of the improved quality of board deliberations and better
supervision of the firm’s disclosures (Gul et al., 2011). Gul et al. (2011) argue that gender-
diverse boards improve the quality of public disclosure through better monitoring. The
current literature also suggests that female directors provide greater oversight and monitoring
of managers’ actions and reports (Hillman et al., 2007; Adams and Ferreira, 2009) through
promoting better board attendance, assuming monitoring positions on audit, nominating, and
corporate governance committees, and demanding greater accountability from managers for
poor performance (Gul et al., 2011). Gender diversity has also been found to facilitate
creativity within groups (Hoffman and Maier, 1961; Nemeth, 1986). By taking a broader
view, the board will have a better understanding of the complexities of the business
15
environment and thus improve decision-making. A more gender diverse board may also
improve a firm’s competitive advantage if it improves the firm’s image (Campbell and
Mínguez-Vera, 2008).
Academic research has advanced gender board composition from different perspectives and
with different results. A comprehensive discussion, especially about women directors on
corporate boards, is included in the study of Terjesen et al. (2009). Their study supports the
position that women directors contribute to important firm level outcomes since they play
direct roles as leaders, mentors, and network members as well as indirect roles as symbols of
opportunity for other women. They inspire them to achieve and stay with their firms. Willims
(2003) finds that female directors may be more inclined to use the firm’s profit to help others,
i.e. engage in charitable giving activities based on 185 Fortune 500 companies in 1994.
Webb (2004) tests the effect of gender composition of the board on a range of measures of
social responsibility including environmental responsiveness. Adams and Ferreira (2009)
suggests that female directors have a significant impact on board governance, i.e. board
inputs and firm outcomes based on 1,939 firms for the period 1996-2003. Post et al., (2011)
find that the boards with a higher proportion of outsiders and those with three or more female
directors have more favourable environmental disclosure strength scores, based on a sample
of 78 companies (only electronic and chemical) that were on the list of 2006 and 2007
Fortune 1000 companies. The study by Liao et al. (2015) suggests that the small number of
female directors make a difference in GHG disclosure decisions in the sample of the 329
largest companies in the United Kingdom based on 2011 CDP data.
Given the evidence, some scholars have argued that women’s more protective attitude toward
the environment is due to their reproductive role, while others have argued that, as a group,
women may be more aware of environmental exploitation because of their experience in a
cultural system of paternalistic exploitation (Wehrmeyer and McNeil, 2000). A large body of
16
evidence supports the view that women are more concerned than men about perceived health
and environmental risks (Bord and O’Connor, 1997; Davidson and Freudenburg, 1996).
Accumulated research findings show that women tend to express higher levels of concern
about technology and the environment than do men (Davidson and Freudenburg, 1996).
Moreover, women receive more positive rewards than men for altruistic behaviour including
caring and concern for others (Gilligan, 1982). The topic of female intelligence was
addressed in 19th century psychology via phrenology and the neuroanatomists (Shields,
1975). Haier et al. (2005) study finds that on neuroanatomical basis, the general level of
intelligence is the same in men and women. However, the psychology of women in acquiring
the character of an academic entity was witnessed by the proliferation of research on sex
differences (Shields, 1975). Women are typically socialized into communal values reflecting
a concern for others, selflessness, and a desire to be at one with others. Men are usually
socialized into agentic values involving self-expansion, self-assertion, competence and
mastery (Eagly, 1987). As a result, women tend to be more aware and concerned than men
about the links between environmental harm and personal well-being (Stern et al., 1993).
It has also been argued that women’s experience of motherhood gives them a heightened
sense of morality that contributes to a more responsible and ethical use of power and
authority (Sinclair, 1998). In this regard, in the typical masculine environments driven by
competition, individualism, hierarchy and technical outcomes, feminine values are commonly
viewed as being based on mutual empowerment, empathy and authenticity (Dillard and
Reynolds, 2008). Tremblay et al. (2016) argue that if such gender-based sensitivity and skills
really exist, then the economic logic of efficiency should lead businesses to diversify their
boards’ gender composition. In addition, a meta-analysis of gender differences in moral
orientation (Jaffee and Hype, 2000) shows that women are somewhat more likely than men to
use care reasoning. However, men and women use similar principles of fairness and equity
17
(Post et al., 2011). It can be argued, therefore, female participation in the boardroom
increases the likelihood of voluntary disclosure of climate change-related risks in the CDP.
Therefore, the main hypothesis is stated as follows:
H1: There is a positive relationship between gender diversity and carbon disclosure score.
3.2 Size of the Board of Directors:
Board of directors have recently received considerable attention, in both practitioner and
academic venues (Fama and Jenson, 1983; Baysinger and Butler, 1985; Boeker and
Goodstein, 1991; Goodstein and Boeker, 1991; Daily and Dalton, 1994a, 1994b; Hillman et
al., 2000; Adams and Ferreira, 2007; Rose, 2007; Prado-Lorenzo and Garcia-Sanchez, 2010;
Liao et al., 2015 and Ben-Amar et al., 2015). The board of directors plays a key role in
monitoring management and in constructing mechanisms that align managers’ objectives
with shareholders’ interests (Armstrong et al., 2015). They also play a crucial role in
corporate policy formulation, as well as its implementation and reviews (William, 2003).
From an institutional perspective, larger boards are assumed to be beneficial (Judge and
Zeithaml, 1992). Jensen (1993) argues that boards with more than about seven to eight
members are unlikely to be effective.
The allocation of decision (or control) rights within an organization is a fundamental building
block of organizational structure (Jensen and Meckling, 1990). Therefore, the size of board is
important because larger boards are more likely to include more qualified directors (in terms
of education and business experience) and, therefore, allow board members to offer the
management high-quality advice (Zahra and Pearce, 1989). Lu et al. (2015) argue that this
could contribute to the firm’s image and relationships with stakeholders. However, their
findings do not support that hypothesis. Nevertheless, scholars have found a larger board to
be better (Gales and Kesner, 1994; Dalton et al., 1999). In this case, the climate change risk
issue could be considered by larger number of board members as their background skills
18
(education, experience) help of understanding and evaluating a firm’s social roles ( Chang et
al., 2015). They can bring a wealth of knowledge and experience to the board and can also
increase the element of independence and objectivity in the board’s strategic decision-making
(Fama and Jensen, 1983). Having more directors also increases the pool of expertise and
advice that executives can capitalize on. Pfeffer and Salancik (1978) contend that “for
proponents of resource dependency, larger boards increase the company’s ability to deal with
environmental uncertainty and to form links with business partners” (p. 172). Ruigrok et al.
(2006) argue that if environmental complexity and uncertainty have risen, boards have to deal
with higher information-processing demands. They find that one way of meeting this demand
is to enlarge the board size. In our context, CPD’s concerned with global warming or
reduction of GHG emissions, firms need to invest in green technology in order to create long-
term economic value through energy savings and improved environmental image. Therefore,
carbon pollution control is largely considered a social responsibility (Liao et al., 2015) and
the directors’ collective decisions (Luo and Tang, 2014). These observations imply that
having larger number of directors on a board with diversified directors’ knowledge could
limit the board’s ability to contribute to the strategy development process. This leads us to
our second hypothesis.
H2: There is a positive relationship between board size and carbon disclosure score.
3.3 CEO duality
The situation where the CEO is also the chairman of the board is called CEO duality
(Ruigrok et al., 2006; Rechner and Dalton, 1991). From an agency perspective (Fama, 1980),
CEO duality involves an inherent role conflict for the CEO-chair and enhances the power of
the CEO relative to the board. This compromises the board's functions of monitoring and
disciplining the CEO (Tang, 2016). Boards of directors are charged with ensuring that CEOs
carry out their duties in a way that serves the best interests of shareholders (Finkelstein and
19
D'aveni, 1994). Duality offers the clear direction of a single leader, and a resulting faster
response to external events (Boyd, 1995, p. 301). Proponents of duality also characterise the
board chair position as ‘being relatively less powerful and more ceremonial and symbolic
than the CEO’s position’ (Harries et al., 1988, p. 214). In a review of the CEO duality
literature, Krause et al. (2015, p. 268) conclude that “the literature has produced almost no
evidence suggesting that CEO duality reduces a board’s ability to hold its CEO accountable”.
The literature also suggests that duality enables the CEOs to pursue their own agenda due to
greater power and influence over firm decision-making. However, that power does not reduce
their vulnerability to dismissal (Martin et al., 2017). As a key organizational decision
maker, CEOs evidently hold greater accountability and take initiative regarding
corporate social responsibility policies (Oh et al., 2014). It is also likely that CEO duality
increases the CEO’s bargaining power (Monem, 2013).
However, agency theory is more critical towards CEO duality (Ruigrok et al., 2006). Their
assumptions rely on three issues: first, the CEO-chairman is responsible for organizing board
meetings which gives the CEO a significant influence on the meeting agenda and on the
information provided to directors (Pearce and Zahra, 1991). Second, duality gives the CEO
more influence on the nomination of new directors or executives (Westphal and Zajac, 1995).
Third, as companies face increasing environmental instability, the separation of the two roles
might be one way to cope with higher information processing demands. Therefore, if a CEO
is too powerful it hinders outside directors from opposing and challenging strategic
propositions of the CEO (Golden and Zajac, 2001). We, therefore, argue that a strong CEO
arising from the CEO duality will have a negative impact on strategic board involvement and
we arrive at our third hypothesis.
H3: There is a negative relationship between CEO duality and the carbon disclosure score.
20
4. Research Design
4.1 Sample and Data
We use CDP’s data together with firm characteristics and corporate governance data for 2011
to 2013 for companies by searching the Bloomberg data set. Several previous research studies
on the CDP database were completed for the 2007 to 2010 time period. Our sample is
extended to the 2011-2013 periods. The total observations for the three year period are 1175
companies. However, based on corporate governance and firm characteristics data

availability for the model, our sample includes 331 companies from 10 industry sectors in 33
countries with firms in 12 geographical locations (see Appendix). Table 1 shows the sample
size and the sample selection procedures for the study.
Table 1: Sample size and sample selection

Number of firms available in the CDP data set (2011-13) 1175
Less, Missing data for empirical tests 844
Total number of firms in the sample 331
Industry sector No. of firms Percentage
Consumer discretionary 50 15.10
Consumer staples 39 11.77
Energy 16 4.83
Financials 52 15.70
Health care 36 10.87
Industrials 39 11.77
Information technology 51 15.40
Telecommunication services 04 1.21
Materials 23 7.00
Utilities 21 6.35
Total 331 100
5. Research Design and Variables

5. 1 Model
We test the hypotheses of this study by employing the main regression model as below. Table
2 provides a description/definition of our dependent, independent, and control variables.
21
CDP Score = ߙ + ߚ 1 WOB + ߚ 2 BSIZE + ߚ 3 CEODU + ߚ 4 BOM + ߚ 5 TOBQ + ߚ 6 ROA + ߚ 7
R&D + ߚ 8 ENGC + ߚ 9 TAS + ߝ
Table 2: Description of dependent, independent and control variable and expected sign
Dependent variable
CDP Score: The company's carbon disclosure score (CDS), measured by Carbon Disclosure project
(CDP)
Independent variables Sign Definition
WOB + Number of women directors in the board
BSIZE + Number of members in the board
CEODU - If CEO is the chair of the board of directors
Control variables
Number of board meetings held during the calendar
BOM + year
Tobin’s Q is the total market value of the company

based on the year end price and the number of shares
outstanding, plus preferred stock, book value of long
TOBQ + term debt and current liabilities, divided by the book
value of total assets.
ROA + Return of asset
Research & development expenditure divided by total

R&D + asset
ENGC + Amount of energy consumed by a particular firm
TAS + Natural logarithm of the company's total assets
5. 2 Dependent variable
This study uses the carbon disclosure scores of the Carbon Disclosure Project (CDP) from
2011 to 2013 (inclusive). We have selected the CDP as the base of our sample given the fact
that the CDP is an independent non-profit entity that facilitates the collection of emission-
related data for institutional investors and they provide data for major global companies. The
CDP was formulated in response to institutional shareholder requests for firm-specific
greenhouse gas (GHG) information. Each year, CDP asks the top executive managers of the
world’s largest public companies to disclose information about the risks and opportunities
posed by climate change, the strategies being pursued to address them, and company-wide
22
greenhouse gas emissions. Their questionnaire focuses on how the company is affected by
global warming or by the need to reduce its emissions of GHG. The CDP questionnaire
covers five sections: Risks and Opportunities, Emissions Accounting, Verification and
Trading, Carbon Reduction Performance, and Climate Change Governance (CDP Report,
2013). The disclosure score assesses the completeness and quality of a company’s response.
Its purpose is to provide a summary of the extent to which companies have answered CDP’s
questions in a structured format. A high disclosure score signals that a company provided
comprehensive information about the measurement and management of its carbon footprint,
its climate change strategy and risk management processes and outcomes (CDP Report,
2015). A score (from 0 to 100) is applied to most of the company responses to the CDP,
which are assessed for disclosure and performance. On the basis of firm response, the CDP
prepares a carbon disclosure score (CDS) which is publicly available.
5. 3 Independent and control variables
The main variable of interest of the study is women directors on the board (WOB) and their
influence on CDP disclosure. Our sample includes only firms having women’s presence on
corporate boards to observe their specific effects on CDP disclosure after separating from
firms without women director on the board. Therefore, our focus is particularly on the role of
women on the board in the climate change disclosure. Since women on the board (WOB) is
integral part of the board structure, without the functions of the board women director cannot
influence or make a difference in decision making process. The number of female directors
and their share among board members are important in this regard to play a role along with
other members in the board including the CEO being the chairman of the board. CEO with
chairman role attached becomes more powerful than any other board members. Therefore, we
have included both board size (BSIZE) and CEO duality (CEODU) as independent variables
in the regression model to see whether women directors’ role on CDP disclosure is mediated
23
by other board variables or not. As such hypotheses are developed for these three
independent variables in reference to related literature in Section 3.
In regards to control variables, previous studies (Waddock and Graves, 1997; Brammer and
Millington, 2009; Bear et al., 2010; Galbreath, 2011; Post et al., 2011; Setó‐Pamies, 2015)
argue that firm size and profitability, can exert influence on a firm’s responsible behaviour.
We control firm size (TAS) and profitability (ROA and TOBQ) variables in our study. Firm
size is controlled with a measurement of total tangible assets, and is transformed

logarithmically due to the positively skewed distribution. The firm’s success is explained by
its performance over a certain period of time (Bauwhede, 2009). There is evidence that a
firm’s financial performance strongly influences its level of social responsibility. This is
because a firm with higher profits also has more resources to spend on the quantity and
quality of carbon disclosure (Brammer and Pavelin, 2006). According to slack resources
theory (Waddock and Graves 1997), higher levels of CSR might be driven by better financial
conditions such as high profitability. In contrast, Tobin’s Q refers to a market value measure
of expected long-run firm performance (Bozec et al., 2010). ROA only reflects past corporate
performance. However, Tobin’s Q has the advantage of reflecting shareholders’ share. This
makes it easier to compare companies which reflect future profit through an evaluation of
investors (Chung and Pruitt, 1994). We, therefore, include this control variable because it is
forward-looking and is a reflection of the expectations of the shareholders concerning the
firm’s future performance (Hutchinson and Gull, 2004) and corporate social accountability.
Frequency of board meetings may have an impact on monitoring and strategic decisions
about carbon emissions. They also allow more time for directors to confer, set strategy, and
monitor management. If firms have fewer board meetings than are necessary, by
overemphasizing costs, board meeting frequency will be positively associated with firm value
(Vafeas, 1999). Conger et al. (1998) also suggest that board meeting time is an important
24
resource in improving the board’s effectiveness. R&D is included as control variable by
considering how the R&D fits within the firm's overall activities, and by revealing the firm's
strategic vision (Entwistle, 1999). It also reflects the extent of information asymmetry
associated with R&D (Aboody and Lev, 2000). We also include ENGC (energy
consumption) as a control variable. This is because it is assumed that economic growth
depends on energy consumption (Shen and Sun, 2016). The external pressures that are often
considered as motivation for firms to adopt environmental management practices (Gualandris

and Kalchschmidt, 2014) and in order to comply with regulatory requirements (Jones, 2010)
they are grouped into three different institutional isomorphic categories: coercive pressure
(Zhu et al., 2007), mimetic pressure (Jorgensen et al., 2010; Liu et al., 2013) and normative
pressure (Zhang et al., 2012; Zhang, Wang & Lai, 2015). In addition, in order to balance
economic and environmental performance in response to these external pressures, many
industrial firms have recognized the importance of being low-carbon and environmentally-
proactive by developing and implementing so-called ‘green’ strategies (Fisher-Vanden and
Thorburn, 2011; Gale, 2006).
6. Results and discussion

6. 1 Univariate results and discussion
Table 3 presents descriptive statistics of CDP score, corporate governance and financial
variables. It can be seen in Table 3 that the average CDP scores are 75.45, indicating high
score for the sample firms. The average board size is 12 members, which is relatively high,
with maximum of 25 and minimum 5 members. The women on the boards account for an
average of 2 members of our sample with maximum 7 and minimum 1 member, which is
much higher than the figure of 1 reported by Prado-Lorenze and Garcia-Sanchez (2010) in
2007 CDP data. While CEO duality is 33%, i.e. one-third of the sample firms have CEO-
chair duality, the average board meeting is 10 times in a year. In regards to profitability,
TOBQ is high while ROA is relatively low at around 7% on average. The R&D mean value is
25
$102,722.67 million while total asset is 6,880,000.00 million and the average energy
consumption is $32,976 thousands ton.
Table 3: Descriptive statistics
Variables Mean Median SD Min Max

CDP 75.45 80.00 19.14 0.00 100.00
WOB 2.36 2.00 1.18 1.00 7.00
BSIZE 12.41 12.00 3.03 5.00 25.00
CEODU 0.33 0.00 0.47 0.00 1.00
BOM 9.72 8.00 7.03 1.00 12.00
ROA 6.63 5.32 6.47 -24.41 54.72
TOBQ 1.76 1.36 1.17 0.54 10.26

R&D (in million $) 102722.67 1182.50 874207.83 0.30 14800000.00
ENGC ( in thousands Ton) 32976.14 3266.34 90513.39 9.39 778758.00
TAS ( in Million $) 6880000.00 91192.00 43200000.00 3248.40 733000000.00
Table 4 provides the correlation matrix. The results of pair-wise correlation for CDP score
and all other variables indicate that multicollinearity is not present. This is because the
highest significant correlation coefficient is 0.36 between women on board (WOB) and board
size (BSIZE). According to the table, BSIZE, WOB, CEODU, and BOM variables have
significant positive correlations with the dependent variable CDP score at a 1% level except
CEODU which is significant at the 5% level. Since WOB and BSIZE are positively
associated with CDP score, it indicates that women on board and board size have positive
effects on firms in dealing with environmental issues and/or climate change related-risk and,
therefore, participating in the CDP project. However, it is not clear here how CEO duality can
positively influence social responsibility. The other two performance characteristics
variables, ROA and TOBQ, are negatively correlated with CDP score. It may be the case that
carbon emission task is expensive for the sample firms, given that the average ROA is 6.63 in
Table 3. Although average TOBQ is at good share (i.e. 1.76) in Table 3, market investors
may not response positively to firm’s carbon emission activities because of the associated
cost issue.
26
Table 4 Correlation Matrix:
CDP BSIZE WOB CEODU ROA TOBQ R&D ENGC Log TAS BOM
CDP 1.000
BSIZE 0.095*** 1.000
WOB 0.123*** 0.362*** 1.000
CEODU 0.057** -0.036 0.026 1.000
ROA -0.075*** -0.227*** -0.107*** 0.016 1.000
TOBQ -0.013 -0.232*** -0.077*** 0.022 0.743 1.000
ENGC 0.043 -0.010 -.035 0.075*** -0.089*** -0.175*** 1.000
R&D 0.001 -0.046 0.022 0.035 0.1524*** 0.248*** -0.243*** 1.000
Log -0.039 0.068*** 0.034 -0.100*** -0.289*** -0.377*** -0.186*** 0.092*** 1.000
TAS
BOM 0.119*** 0.1352*** 0.101*** -0.376 -0.075*** -0.111*** -0.316*** 0.049 0.220*** 1.000
***Represent significance at the 1% level; ** Represent significance at the 5% level; * Represent significance
at the 10% level
6. 2 Multivariate regression results and discussion
The model is estimated using the fixed-effects estimator since OLS generally leads to biased
estimates of ߚ (Berkey et al., 1995). Table 5 below presents the regression results in 5
different models where Model 3 and Model 5 are the final models of the study denoting the
explanatory power of the model in terms of R2 and F-statistics. In Model 1, we consider
dependent variable CDP and the main variable of interest women on board (WOB) (i.e. CDP
Score = ߙ + ߚ 1 WOB). The results shows positive significant effect of women (WOB) on
CDP disclosure, as predicated. In Model 2, we consider CDP and all control variables (i.e.
CDP Score = ߙ + ߚ 1 BOM + ߚ 2 TOBQ + ߚ 3 ROA + ߚ 4 R&D + ߚ 5 ENGC + ߚ 6 TAS + ߝ),
which indicates CDP is positive significantly influenced by Tobin’s Q (TOBQ) and firm size
(TAS) and negatively, though weak, by profitability (ROA). In Models 3, we combine Model
1 and Model 2 to observe the effect of WOB on CDP in the presence of control variables (i.e.
CDP Score = ߙ + ߚ 1 WOB + ߚ 2 BOM + ߚ 3 TOBQ + ߚ 4 ROA + ߚ 5 R&D + ߚ 6 ENGC + ߚ 7
TAS + ߝ). Our results confirm significant positive effect of women (WOB) on CDP
disclosure, as reported in Model 1. Therefore, hypothesis 1 (H1) is accepted, based on
theoretical directions in Section 2.
Since women on board is integral part of the board, it is important to see their impact on CDP
disclosure still exist as the same in the presence of other board members as well as CEO’s
27
dual role as chairman of the board or mediated by other board variables. So, in Models 4, we
extend Model 1 by adding board size and CEO duality variables (i.e. CDP Score = ߙ + ߚ 1
WOB + ߚ 2 BSIZE + ߚ 3 CEODU). The findings remain consistent for WOB showing positive
significant effect on CDP disclosure, while contrary to expectation negative significant effect
of board size (BSIZE) on CDP and no effect of CEO duality (CEODU) are evident. These
results indicate that WOB’s role on CDP disclosure is not mediated or influenced by other
board variables. Women directors can take stand in favour of CDP independently. However,
we find a strong negative significant relationship between board size (BSIZE) and CDP,
although following the literature we expected more board members will support more CDP
disclosure. The CEO duality (CEODU) also reveals insignificant result, though with negative
sign, while we expected that strong CEO in chairman role of the board would restrain CDP
disclosure. Thus, hypothesis (H2) and hypothesis 3 (H3) are rejected.
Table 5: Fixed effects regression results
Model 1 Model 2 Model 3 Model 4 Model 5

Determinant Coefficient Coefficient Coefficient Coefficient
Constant 67.7362*** -229.2455*** -167.2564** 107.8108*** -80.257
(0.7616) (74.7298) (84.3860) (14.9204) (76.390)
WOB 3.6368*** 2.0868** 3.9862*** 3.0490***
(1.8944) (1.0211) (0.6791) (1.0262)
BSIZE -16.19*** -14.421*
(5.955) (8.2132)
CEODU -0.2225 1.4599
(2.52) (3.6830)
BOM -1.8384 -0.0047 -0.4115
(3.0255) (0.1415) (0.1476)
ROA -0.2928* -0.3179* -0.2717
(0.1787) (0.1789) (0.1731)
TOBQ 9.5193*** 8.7145*** 9.2446***
(2.1722) (2.2593) (2.2706)
ENGC 1.2696 1.2652 0.0032***
(4.2497) (4.5859) (0.000)
R&D -185.9579 -179.3969 1.3185
(135.8817) (134.0988) (0.9642)
TAS 24.8940*** 19.924*** 14.755**
(6.3217) (7.6217) (6.6439)
R2 = 0.04; R2 = 0.16; R2 = 0.16; R2 = 0.05; R2 = 0.26;
F-statistic: F-statistic: F-statistic: F-statistic: F-statistic:
6.39; 5.81; P = 5.68; 6.45; P=0.000 7.36; p=0.000
P=0.000 0.000 P=0.000
***Represent significance at the 1% level; ** Represent significance at the 5% level;
* Represent significance at the 10% level; Standard error is shown in the parenthesis.
28
Finally, in Model 5, we extend Model 4 by adding all control variables to observe individual
effect of each independent variable on CDP. The regression results confirm that WOB has
significant positive association with CDP score, which is consistent with the result in the in
Models 1, 3 and 4. Thus, H1 is supported, indicating that women in the boardroom increases
the voluntary disclosure of climate change-related disclosure in the CDP project, which is
consistent with previous studies of CSR or sustainability (Chang et al., 2015; Set-Pamies,
2015; Post, et al., 2011; Prado-Lorenzo and García-Sanchez, 2010; Bear et al., 2010). This
result confirms the theoretical arguments that women tend to be economically less self-
interested than men (Ibrahim and Angelidis, 1995); and their presence favours problem
solving, increases leadership effectiveness, and fosters efficiency in the establishment of
global relationships (Adams and Ferreira, 2009; Robinson and Dechant, 1997). This focuses
on gender diversity implicit to accounts emphasizing social networks (Westphal and Milton,
2000), Critical Mass Theory (Kramer et al., 2006; Bear et al., 2010) and team dynamics
(Woolley et al., 2010; and Hoogendoorn et al., 2013). The spin-off benefits arising from
diversity include enhanced monitoring, more incisive decision-making and greater
transparency (McGuinness, et al., 2016).
Further, in Model 5 we find a negative but weak significant relationship between CDP and
board size (BSIZE), as compared to Model 4. So, H2 is not supported. Jensen (1993) suggests
that board size is negatively related to the ability of the board to pursue long term strategic
goals. Jensen (1993) also suggests that the board of directors can do their tasks effectively
when the board size is not more than seven or eight members. In our study, average size of
the board is 12 and due to this reason, board size is negatively associated with CDP score. In
order words, it suggests that it is difficult for a large board to co-ordinate and be involved in
strategic decision-making (Bonn et al., 2004). Moreover, Lindgreen et al. (2010), who found
that boards do not have a significant influence on the extent of CSR disclosures. As
29
climate change related risk decisions involve with firms long term strategic goals, therefore,
it is likely that the small size of board is effective in social and environmental strategic
decision-making. Firstenberg and Malkiel (1994, p. 34), contend that a small board size of
eight or fewer members ‘engenders focus, participation, and genuine interaction and debate’
for directors to advise management on company issues which satisfied under agency
perspective (Ong and David, 2008). Again, in Model 5, the CEO duality (CEODU) shows
insignificant result though with positive sign against negative sign in Model 4, that is no
association with the CDP score as found in Model 4. So H3 is also not supported. This
means that CEODU is less prevalent in making decisions on climate change related-risk
issues in our sample firms. Taken overall, our results suggest that a woman on board (WOB)
has strong positive significant association with CDP disclosure but board size and CEO
duality have not.
In regards to control variables in Model 5, it is noted that the coefficient of board meetings
(BOM) is not significant, suggesting that there is no direct link between the overall activities
of the board and carbon disclosure. This is also supported by Liao et al. (2015) who notice
that it is true even in the presence of environmental committee. Firm size (TAS) is positive
and significant. It is assumed that due to their scale, large firms are more visible, perceived to
be more polluting, and thus are more likely to be expected to engage in environmental related
reporting (Hackston and Milne, 1996). Results also show that R&D is insignificant. However,
ENGC and TOBQ are positively significant at level 1%. The reason for insignificant R&D is
that it is neither related to the climate change issue nor has involvement to create or invest in
any technology to reduce carbon emissions. It is also interesting that ENGC (energy
consumption) is positive and significant with CDP score. This indicates that firms with an
energy consumption policy are more concerned with environmental issues and as a result,
they are willing to respond to the CDP project. TOBQ is positively significant, meaning that
30
market-based profitable firms are concerned with climate change-related risks, although
accounting-based profitability (ROA) is not significant. However, it does indicate that
profitability is a factor in taking any decisions, especially those related to climate and
environmental issues.
7. Conclusion
The motivation for this study is to examine how the gender composition (women on board)
affect corporate climate change related disclosure. Our paper examines the effect of gender
diversity on Carbon Disclosure Project (CDP) score/index, in particular the impact of women
on corporate boards (WOB) on carbon emission disclosure (CDP) from a global perspective
of 33 countries for the period of 2011-2013. As we mentioned earlier that CDP project has
been working since 2000 on climate change risks and opportunities and there are currently
5,500 companies that disclose to CDP covering climate change related disclosure including
global warming, greenhouse emissions, water and forest-risk commodities (CDP Report,
2015), therefore, board composition seems to be a major factor which can be assumed to have
some influence on both CSR and CSR reporting (Rao and Tilt, 2016) as well as the climate
change related risk issue.
We document that woman on board plays a vital role in CDP disclosure. Our study extends
current theory, in particular resource dependence theory, by demonstrating that the presence
of women on the board has a positive relationship with the CDP score. The strong
explanatory power of WOB on CDP disclosure provides evidence of need for gender
diversity in corporate boards. Our study is, therefore, unique in identifying the corporate
characteristics for addressing the CDP’s climate change program. Again, we report that board
size (BSIZE) has negative significant effect on CDP while CEO duality (CEODU) has no real
effect. In regards to control variables, we find market-based financial performance Tobin’s Q
(TOBQ), energy consumption (ENGC) and firm size (TAS) appear to have positive
31
significant effect on CDP disclosure, however, board meetings (BOM), research and
development (R&D) and accounting-based profitability (ROA) indicate no explanatory
power on CDP.
Our empirical results have certain policy implications that shed light on how to upgrade the
response to these issues. Our findings also have important implications for instituting good
corporate governance and in particular, gender diversity. The outcome of our analysis
advocates that companies that include women directors with a larger board size, may expect
to achieve better carbon performance and voluntarily disclose of the level of carbon
information requested by the CDP. The study of Luo and Tang (2014) also indicates that
good governance performers in the market are more forthright in reporting their commitment
to carbon control using the CDP disclosure code. Therefore, our study is relevant to investors
and other stakeholders in evaluating the accountability of companies in relation to strategies
for managing climate risk. This study also offers policy makers’ insights into corporate
governance practices in relation to global warming risks and opportunities in order to meet
the needs of a low-carbon economy. Because, good corporate governance practices lead to
reduced agency costs, and good governance performance is likely to disclose more and
distinguish themselves for their investors and other stakeholders (Clarkson et al., 2008; Al-
Tuwaijri et al., 2004). In fact, corporate governance mechanisms are usually design to protect
both shareholders and stakeholders interests in the firms. Our study supports both resource
dependence and stakeholder theories that boards of directors serve as a linking mechanism
between companies and their stakeholders, and that they provide legitimacy to different
stakeholder groups in the society. The positive impact of gender diversification is significant
as having women directors who can enhance critical analysis in board decision making
process. Our results contribute to the growing body of literature highlighting the importance
32
of board diversity and governance variables when considering climate change related risk
issue at the firm level.
As with all empirical research, this study is not without limitations. First, the study sample
was composed of CDP data which include 10 different industry sectors, though diversity of
board may be different by the nature of industry. However, we did not control this industry
sector variable. Future research can be expanded to examine women on board against
industry nature of the firms, i.e. sensitive industry, for example health care firm, mining etc.
Second, we do not consider the effect on CDP scores each year against number of women
increases in the board room. Third, due to non-availability of data for large number of
countries, we did not classify women directors as independent or non- independent, so further
research can be extended by considering directors who may be classified as independent but
who are actually affiliated with the firm through prior employment or ongoing business
relations.
Note:
In this article, we interchange different terms of climate change related risk such as CSR,
social responsibility, carbon emission, GHG and sustainability, which ultimately concretely
covers all aspects of climate changes. The same concept is also supported by Prado-Lorenzo
and Garcia-Sanchez (2010).
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Appendix:
List of sample companies and their geographical locations
Geographical location
Industry sector Total Africa - America - Latin & America – Asia- Australia and Europe - North & Europe - Southern &
south Caribbean North and New Zealand Western Eastern
Africa Canada
Consumer 50 1 21 1 14 1 12 0
discretionary
Consumer 39 0 20 3 1 15 0
staples
Energy 16 0 7 2 3 1 2 1
Financials 52 1 10 3 13 5 19 1
Health care 36 0 25 2 0 9 0
Industrials 39 0 16 1 10 1 11 0
Information 51 1 23 2 12 0 12 1
technology
Materials 23 2 7 3 4 1 5 1
Telecommunica 04 2 0 0 0 2 0 0
tion services
Utilities 21 3 4 0 6 0 8 0
Total 331 10 133 12 67 12 93 4
53

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Research limitations/implications -The limitations of the study mostly revolve around

Keywords Climate change, Carbon disclosure project, GHG, Corporate social

Paper type Research paper

to the Intergovernmental Panel on Climate Change (IPCC), average temperatures have

significant increases in surface temperatures and atmospheric CO2 concentrations. In

Therefore, there is a growing demand for carbon-related information (Organisation for

disclosure. It uses CDP’s, a nongovernmental and not-for-profit organization, ‘carbon-related

effectiveness, or women’s limited experience in leadership positions could have negative

literature recognizes the composition of boards of directors as an important factor in

GHG emissions disclosures with mixed results.

that female boardroom participation is positively related to the voluntary disclosure of

opportunities that have been requested by CDP as an institutional stakeholder. Institutional

contrast, our study of climate change is global in nature.

diversification. Corporate governance mechanisms encourage firms to disclose voluntary

economic environments, it is imperative to observe whether corporate governance

executive positions and on the board (Ben-Amare et al., 2015).

following hypotheses in terms of management’s motivation about carbon emission disclosure

strategies with regard to corporate climate change risk issues.

score. In recent years, corporate governance reforms emphasise diversity in boardrooms

presence of female directors on boards can reinforce mechanisms of stakeholder engagement

advice, shareholders versus stakeholders), and the importance of the independency of

constitute the board to be a reflection of the ownership as social justice is a dominant

theoretical orientations is made in the following paragraphs.

2.1 Stakeholder theory

theory is particularly appropriate. Researchers advocate that stakeholder theory is

relationships produce different arguments, leading to a number of variations of the

theory: a normative (ethical), a managerial (instrumental) and the descriptive versions.

management might address stakeholder concerns from an accountability perspective, the

stakeholders strategically by identifying them with the self-interest of the business

activities and strategic decision.

In this case, social performance refers to an organisation’s responses to anticipated or existing

stakeholder groups to devote resources to corporate social responsibility (McWilliams and

the CDP project.

2.2 Resource dependence theory

secondly, linkage provides a channel for communication purposes, thirdly, linkage is an

important step in obtaining commitments of support from important elements of the

environment and fourthly, linkage has a value in legitimizing organisations (Lückerath-

expectations are considered key components of organisational survival.

an organisation. Resource dependence argues that external pressures- such as competition,

board’s role as corporate boards do respond to environmental pressures and demands.

2.3 Agency theory

agents by employing mechanisms - incentive alignment and monitoring - in appropriate

2.4 Discussion on theoretical underpinning

of ‘stakeholder salience’ (Neville et al., 2011) in explaining stakeholder relevance in relation

disclosure is a way of satisfying salient stakeholders and reflects an adaptive management

explain GHG-reporting phenomena. Therefore, in this context, stakeholder and resource

3. Related literature and Hypotheses development

change-related business risk information depends on the board of directors since it is a

Prado-Lorenzo, and Garcia-Sanchez, 2010).

Diversity is a characteristic of an organization’s board of directors, which is related to the

existence of differences in its members’ traits (Prado-Lorenzo and Garcia-Sanchez, 2010).

knowledge domains, perspectives and ideas will be considered in the decision-making

Fredrickson, 2001), internationalization strategies (Datta, et al., 2009), R&D investment

Zaman, 2016) and corporate governance (Farber, 2005; Monem, 2014).

with different results. A comprehensive discussion, especially about women directors on

social responsibility including environmental responsiveness. Adams and Ferreira (2009)

largest companies in the United Kingdom based on 2011 CDP data.