Secret of Successful Companies: Women Board Members
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. CREDIT: Female Executive Image via Shutterstock |
Businesses that appoint women to their corporate boards are more likely to be successful, new research shows.
A study by researchers at the University of California, Berkley found that companies with one or more women on their boards are significantly more likely to have improved sustainability practices, which are considered indicators of risk management, opportunity recognition and strong leadership.
As part of the study, researchers analyzed the environmental, social and governance (known as ESG) performance of Fortune 1500 companies from the past 20 years. ESG, a widely accepted measure of corporate sustainability among the investment community that past research shows is linked to better financial performance, rates companies on a wide range of criteria, including energy efficiency, the reduction of packaging, investments in renewable power, employment benefits, performance incentives, the production of products with improved health or nutritional benefits, as well as how well they avoid corruption and bribery.
"We also found, like researchers before us, that the sweet spot is three," said Kellie McElhaney, a researcher and adjunct assistant professor. "Companies with at least three female board members had a better ESG performance but we're talking about very few companies who meet this threshold — just three of the 1,500 we studied: Kimberly-Clark, General Motors and Walmart."
As part of the research, McElhaney interviewed several female directors to learn more about their personal experiences on a board.
"Women and sustainability are two sides of the same coin," Halla Tomadottir, executive chairwoman and co-founder of Audur Capital in Iceland, said in the study. "Corporations build better societies if they have balanced boards."
Former U.S. Secretary of Agriculture Ann Veneman, who serves on the board of Nestlé, told researchers that it is essential for businesses to gain the perspective of women on their board.
"The voices of women are critical in advancing the goals of corporate shared value," Veneman said in the study.
McElhaney provides several steps that need to be taken in order to expand female board membership, including:
- Conduct more research
- Continue to build a pipeline of women to serve on corporate boards
- Foster a business community of sponsors for females that includes both men and women
- Train business leaders of both genders to be "change agents"
The study, "Women Create A Sustainable Future," is co-authored by Sanaz Mobasseri, a University of California Ph.D. candidate and sponsored by KPMG and Women Corporate Directors.
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