Diversity and sustainability: How can gender diversity on boards impact ESG performance? Evidence from ASEAN-5 countries

This study examined how gender diversity (GD) on boards affects ESG performance using unbalanced panel data of 719 companies in ASEAN-5 countries from 2013 to 2022 observation years. We found that higher GD on companies’ boards significantly enhances ESG performance. Every increase in one standard deviation of the GD variable boosted the ESG score in the range of 0.1002, 0.0983, and 0.0583 across different model specifications. Female directors tend to demonstrate greater sensitivity and commitment to sustainability, which translates into stronger ESG outcomes. Interestingly, heterogeneity analyses show that the positive effects of GD on ESG only occur in large companies, private, and two countries with more ESG-conscious markets (Singapore and Malaysia). This paper suggests the need for tailored policy interventions and incentives to promote gender diversity, particularly for smaller companies with limited internal capabilities or those operating in environments where ESG support is lacking.