Days ahead of the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow, a new study of the largest corporate greenhouse gas emitters shows that companies with diverse boards are taking more substantive action to reach net-zero emissions.
The research, conducted by BoardReady – a nonprofit that aims to increase board diversity through data-driven solutions – and sustainability consultancy A Bird’s Eye View Ltd., demonstrates a strong correlation between more gender and age diverse boards and companies acting with greater speed and substance to combat climate change.
As climate change becomes increasingly significant in the global corporate landscape, governments, stakeholders, and shareholders alike have begun to pay greater attention to how companies measure up in terms of climate action.
While companies are becoming more diverse, they have some way to go. The report, analyzed 159 companies identified by Climate Action 100 + as the largest greenhouse gas emitters based on their level of engagement on climate, and their directors’ gender, race, tenure, median age, and age span, found that:
The evidence clearly shows a lack of board diversity is a potential barrier to more effective engagement. Companies with more gender diverse boards are:
“The world is watching, looking to companies for conviction. The evidence is clear that more inclusive leadership promotes bolder decisions on climate change. The spotlight is on the commitments and the capital needed to decarbonize the economy. More attention is needed on the board composition, process and leadership needed to steward this transition,” said Helena Wayth, Managing Director of A Bird’s Eye View.
Company action on climate change is rapidly evolving, however there are significant gaps in awareness and action. The majority of companies assessed are taking action on climate risk, governance, and policy; some are making medium and long-term GHG emissions reduction commitment; however, few have developed decarbonization strategies and only 4 percent have allocated future capital aligned with long-term reduction targets.
The study analyzed data from 159 global companies, identified by the Climate Action 100+ initiative as the largest corporate greenhouse gas emitters. They are estimated to represent over 80% of global industrial emissions. Encompassing over 10,000 data points the study looked at company preparedness to transition to net-zero emissions based on performance against the Climate Action 100+ Net-Zero Company benchmark indicators. Five dimensions—gender, race, median age, age span, and tenure—were used to evaluate the relationship between board diversity and company progress on climate change reflected through nine of the benchmark indicators.
This report comes at a pivotal moment for the world, as governments and world leaders prepare for COP26, the 26th United Nations Climate Change Conference to be held in Glasgow next month with the goal of accelerating action on the Paris Agreement and the climate crisis.
At BoardReady, we view diversity as not just a matter of fairness but as both a societal and a fiscal responsibility. We seek to transform organizations and drive performance through equitable boards. Our proprietary platform, the Board Ready Index (BRI), is a benchmark that helps companies visualize their board's diversity, compare it against their peers', and map their progress toward their own board diversity aspirations. The index is calculated based on the gender and racial diversity on boards along with the median age, age span, and tenure of directors.
A Bird’s Eye View is a strategic business and sustainability consultancy working at the intersection of commercial, social, and sustainable development. We help organizations strengthen purpose, build a more sustainable business model for greater resilience and differentiation, and create a governance framework for accountability. Founder and Managing Director, Helena Wayth has extensive global brand, business and sustainability experience spanning markets, sectors, and cultures.