“Firms with greater female board representation experience significantly fewer environmental lawsuits,” Liu writes.
Each woman appointed to a corporate board reduces the firm’s risk of being hit with an environmental lawsuit by 1.5%, according to a new analysis published in the Journal of Corporate Finance. In fact, board gender diversity is among the top three factors predicting a company’s vulnerability to environmental lawsuits.
The findings are consistent with other studies showing that the presence of women on corporate boards reduces unethical conduct such as securities violations, and counters risk-taking by male CEOs when it comes to investment and acquisition decisions. The new study shows that the benefits of women directors extend to the environmental realm.
In the study, Chelsea Liu of the University of Adelaide Business School in Australia combed through a public database of lawsuits filed in US federal courts against S&P 1500 firms – a total of 1,893 environmental lawsuits filed against 221 firms between 2000 and 2015. The lawsuits alleged violations of the US Clean Water Act, Clean Air Act, or other environmental laws pertaining to hazardous waste disposal and cleanup of contaminated land.
Liu assembled information from other public databases on the gender makeup of each company’s board of directors and which firms had female CEOs. Then she performed various statistical analyses to suss out the relationships between corporate gender diversity and exposure to environmental lawsuits.
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