The impact of female board membership and firm performance on the environmental management system

Abstract

This paper examines the effect of gender diversity on the Environmental Management Systems (EMS) measured as ISO 14001 adoption among Saudi-listed companies. In this study, we propose that female board members significantly influence EMS adoption by employing agency theory, stakeholder theory and resource dependency theory to predict the relationship. The final sample of this study consists of 44 firm-year observations for non-financial companies listed on the Saudi Stock Exchange with ISO 14001 certification from 2016 to 2019. The logistic regression results show that higher representation of women on boards is associated with more extensive use of EMS indicating the importance of gender diversity in enhancing corporate environmental responsibility. Moreover, companies with better financial performance are less likely to adopt comprehensive ecological management practices. This paper contributes to the existing body of knowledge by revealing how board diversity is related to financial performance and environment management systems among firms operating in emerging markets. These findings have policy implications for policymakers, business leaders and researchers engaged in sustainable development initiatives to enhance governance mechanisms.