Climate Change Innovation Through Gender Diversity
The debate around board diversity, of both gender [and race], continues and has reached the forefront of the collective mind of the board.
It is well documented that a diverse thought-making process at the management and leadership level can lead to better decisions, and in the long run, improved financial results – particularly if a board’s culture is structured to help members perform their duties better.
In addition, a diverse board is more likely to attract and retain a varied workforce which is good news for the continued growth and development of a business.
Alongside this, the risks posed by climate change which are not just confined to specific industries such as oil and gas, utilities and mining, are in the spotlight, with businesses developing innovative ways to tackle the risks posed.
The correlation between gender diversity and climate change innovation
A recent report (December 2020) “Gender diversity and climate innovation” by Bloomberg NEF and the Sasakawa Peace Foundation considers both the systemic risk of climate change and a lack of board diversity and discovers how alleviating one risk can help to amplify how we solve the other.
The report studied 11,700 global companies and puts the issue of gender diversity on boards into context, saying “The proportion of companies with more than 30% women on the board of directors has risen eightfold in just over a decade, from 2% in 2009 to 16% today.” So, while progress has been made in this area, there is still, in our view, a long way to go.
The report finds “A proportion of 30% or more women on corporate boards has shown a positive correlation with better climate governance and innovation in the global electric utilities, oil and gas, and mining sectors over the last four years…”. It goes on to consider the positive “…impact of gender diversity on climate governance, climate performance, innovation, and climate innovation.”
While gender diversity in itself cannot be attributed to lowering emissions, the report says that “… leading integrated oil companies with higher female representation at the board level are also more likely to have set decarbonization strategies and to have invested in digitalization activities.”
The relationship between gender diversity and climate change innovation is a hugely topical area. The UN’s Climate Change Conference (COP 26), which aims to ‘bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change’ is due to be held in the UK in November, later this year.
An important initiative is underway to increase gender representation at the Conference, with over 400 female climate leaders calling for greater gender equality at the Conference. #SHEChangesClimate seeks to achieve 50:50 gender balance at the top level of the UK’s COP26 leadership team.
Practical steps to ensure board diversity
So how can businesses put a more diverse board in place? There are a number of steps that the board can take.
Review the existing boards skillset – this includes reviewing the criteria they use for selection of their members to ensure new and neglected skills sets are taken into account to fill gaps.
Improving the recruitment method – surveys suggest that the most popular source for recruiting new board members remains referrals from existing board members. If a board is typically made up of white, middle aged men their network will often comprise of other white, middle aged men. By using agencies that focus on increasing board diversity companies will be introduced to candidates with the necessary skills and experience but who come from a wide range of backgrounds.
Embed diversity training into the company culture – external agencies can nurture emerging leaders to develop a broader perspective. This will create a more diverse mindset amongst potential future board members which in turn serves to improve diversity.
As already mentioned, creating the right environment for the board to succeed is crucial to its overall success and this will translate into the success of the business itself. Tokenism at the board level of a business, should in our view, be avoided.
When all is said and done, it’s clear the growing agenda for businesses to become more diverse, and for climate change innovation to be given the opportunity to flourish, continues to gather pace.
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