Nicola Cucari

Board composition has received increasingly more attention from scholars as an important determinant of environmental, social and governance (ESG) performance. Two factors of board composition receive attention as they strongly relate to sustainability issues: gender diversity and board independence. The aim of this study is to test whether the presence of a critical mass of women in boardrooms correlates with firm ESG performance. In addition, we aim to study whether women receiving appointment as executive rather than nonexecutive directors may positively influence ESG performance. Using a sample of Italian companies listed on the Mercato Telematico Azionario during 2003–2019, the empirical results show that a critical mass of at least three female directors is necessary to improve ESG performance and that executive women directors represent a crucial component of board mechanisms, in terms of aligning the needs of stakeholders, since they increase ESG performance. Because the advising and monitoring functions impact firm value, we support the idea that female directors in strategic positions in the boardroom may benefit ESG performance. Thus, we support the idea of increasing women's presence on corporate boards and across executive leadership as a measure and a signal of how firms can respond to ESG challenges.