Female Directors and Corporate Environmental Decoupling: The Moderating Influence of Board Characteristics

Elena Moreno-Ureba, Nuria Reguera-Alvarado, Francisco Bravo-Urquiza

Keywords: Board ESG experience; Board gender diversity; Board independence; Board tenure; Corporate environmental decoupling

The growing pressure on firms to meet sustainability expectations has led to the proliferation of ESG strategies that widen the gap between ESG reporting and performance, a phenomenon known as "ESG decoupling". This disconnect is perceived as unethical corporate behavior, attracting widespread criticism regarding the role of boards of directors in overseeing ESG practices. Although research has emphasized board gender diversity in shaping ESG strategies, empirical evidence on the influence of female directors on ESG decoupling remains limited and inconclusive.

Our study focuses on corporate environmental decoupling and aligns with prior literature arguing that a one-size-fits-all approach fails to capture the nuanced role of female directors in managing this decoupling. Specifically, we seek to fill a critical research gap by examining how board characteristics serve as key moderating factors in the relationship between female directors and corporate environmental decoupling in environmentally non-sensitive industries. We aim to determine whether the effect of female directors depends on three board attributes: ESG experience, independence, and tenure.

This constitutes a novel research question that is timely and relevant for several reasons. First, environmental decoupling has become a major concern for policymakers and professional organizations due to its detrimental societal consequences. This decoupling undermines the credibility of corporate reports, leading to reduced transparency, greater information asymmetry, and inefficiencies in capital markets. Second, board gender diversity has gained prominence in policy discussions and is regarded as a key determinant of corporate environmental decision-making. Despite this, most research has focused on the impact of board gender diversity on either ESG reporting or ESG performance in isolation, limiting our understanding of its broader influence on environmental strategies. Third, both practitioners and policymakers are increasingly focused on understanding industry-specific ESG reporting and industry environmental sensitivity when analyzing the relationship between boards and environmental outcomes.

We analyze firms in environmentally non-sensitive industries listed on the S&P 500 from 2011 to 2021, building a final sample of 1645 firm-year observations. Our general model tests the association between board gender diversity and corporate environmental decoupling. Additionally, we performed moderation analyses to test how board of directors' characteristics affect the influence of female directors on corporate environmental decoupling. To enhance robustness, endogeneity has been considered in all models, estimated using both a generalized method of moments (GMM) and fixed effects, alternatively considering our two measures for board gender diversity.

Our results highlight that female directors tend to mitigate environmental decoupling. However, this effect is strengthened in boards with longer tenure and greater ESG experience but remains insignificant in boards with higher independence.

Our paper extends previous research in several ways. First, our findings contribute to the literature on the determinants of environmental decoupling by underscoring the pivotal role of corporate boards. Specifically, our results offer novel insights into the complex interplay of board characteristics and underscore the interconnected nature of directors' attributes. Second, our findings contribute to the literature on the relationship between board gender diversity and corporate environmental decoupling. Our study helps reconcile conflicting findings by supporting the argument that contextual approaches are crucial for a more nuanced understanding of the influence of female board members on environmental decision-making. Third, our findings contribute to the ongoing debate on the role of board tenure and board ESG experience in shaping corporate sustainability outcomes. Specifically, our results demonstrate that both factors moderate the relationship between board gender diversity and corporate environmental decoupling.

Finally, our findings offer valuable insights for policymakers, industry professionals, and scholars. First, our findings provide insights for firms in environmentally non-sensitive industries. While these industries face less external pressure regarding environmental practices, current legislation on environmental reporting affects them, making environmental decoupling potentially detrimental to their operations. Our results can guide firms in the selection of board members, helping them understand the value added by key board attributes such as diversity, tenure, and ESG experience. Second, our findings carry significant implications for professional organizations and policymakers who have made recommendations regarding board gender diversity, board tenure, and board ESG experience. Our evidence offers a strong rationale for refining current legislation and recommendations to regulators in environmentally non-sensitive industries.

Third, from an academic standpoint, our study emphasizes the necessity of developing new theoretical frameworks to achieve a more comprehensive understanding of the role of board gender diversity. Our findings support the idea that female directors may help mitigate corporate environmental decoupling, yet it is crucial to extend theoretical research to explore the conditions that either amplify or reduce this effect.

Moreno‐Ureba, E., Reguera‐Alvarado, N., & Bravo‐Urquiza, F. (2025). Female Directors and Corporate Environmental Decoupling: The Moderating Influence of Board Characteristics. Corporate Social Responsibility and Environmental Management, 33(1), 1339-1356. https://doi.org/10.1002/csr.70228