Women Create

A Sustainable Future
OCTOBER 2012

By Kellie A. McElhaney & Sanaz Mobasseri

UC Berkeley Haas School of Business
Research sponsored by KPMG with
Women Corporate Directors (WCD)

Haas School of Business

University of California, Berkeley
 “Women and sustainability multiple dimensions of corporate sustainability.

are two sides of the same Specifically this paper identifies relationships be-
tween female corporate directors and corporate
coin. Corporations build sustainability, and highlights why changes are impor-
better societies if they have tant for the future of business in two main areas of
balanced boards.” focus:

1. We provide a better understanding of the rela-

–Halla Tomasdottir, Executive Chair & Co-Founder,
tionships between female corporate directors and
Audur Capital
corporate sustainability; and
Diversity is a critical factor in improving not just 2. Our research findings build upon existing research
the quality of a company’s leadership and decision- that details the many ways women positively im-
making, but also its overall financial, environmental, pact business, and ultimately, our world.
social and governance performance, and ultimately,
CORPORATE SUSTAINABILITY & BUSINESS
the company’s sustainability. Indeed organizations
As companies and regulators spend more time evalu-
like Credit Suisse1, McKinsey2, and Catalyst3 have
ating operational impacts on climate change, terms
shown that the presence of women at top levels of
like “corporate social responsibility” (CSR), “global
management and leadership has been correlated with
citizenship,” “stakeholder value,” “sustainability,” and
better financial performance for the company.
“corporate shared value” are increasingly appearing
Building on these findings, this study addresses an in shareholder proxy statements, companies’ annual
additional factor: Does the presence of women at the reports, websites, boardroom conversations, and
top positively affect the environmental and social executive leadership team meetings. These various
impact of the firm? We explore and address a poten- ideologies are largely the result of an evolving need
tial relationship between women leaders and sustain- to change business strategy from the historically
able business practices—environmental, social and dominant theme of maximizing shareholder value to
governance—of the firm. This is a path of research a stakeholder-based strategic approach. In an effort
intended to investigate and analyze the relation- to synchronize these terms, we will use the term
ships between top-tier female leaders and corporate “corporate sustainability” throughout this paper.
sustainability performance.
The term “corporate sustainability” was the product
A growing body of research suggests that adding of discussions sparked by two seminal reports in
more women to the upper echelons of the corporate 1987 and 2011. In 1987, the United Nations World
world—and particularly to directorial boards of Commission on Environment and Development
publicly held companies—may help better balance (WCED) elevated discussions about global environ-
business’ current emphasis on short-term profit mental concerns by linking the state of our global en-
maximization towards a broader focus on longer- vironment with development issues. WCED achieved
term goals, including positive environmental, social, this by introducing a concept called “sustainable de-
and governance impact. velopment,” defined as “development that meets the
needs of the present without compromising the abil-
Research suggests that companies that explicitly
ity of future generations to meet their own needs.”4
place value on gender diversity perform better in
Sustainable development refocused policy-makers,
general, and perform better than their peers on the

1 Women Create A Sustainable Future

 for-profits, and non-profits on meeting basic human
needs and “extending to all the opportunity to satisfy The presence of women shapes
their aspirations for a better life,” ultimately further- business from the inside-out
ing development across all countries. This report,
known as the Brundtland Report, recognized that
and outside-in, from the MBA
critical issues facing modern societies—such as pov- training grounds to consumer to
erty, resource depletion, and population growth—are
managerial levels.
embedded within a larger crisis that requires the
involvement of all players in global society, including,
3. Developing stronger reputations and establishing
and importantly, global business. The Brundtland Re-
legitimacy and “license to operate.”
port called all factions of society to action. Now more
4. Achieving value creation.
than ever, the spotlight is on businesses to respond
to this call to action, particularly with weakened An opportunity for female corporate directors with
government and public sectors. today’s corporations exists. With mainstream com-
panies moving toward more efficient and sustainable
Since the success and profitability of business often
business models and strategies, the potential for
depends on its ability to satisfy market needs for
more women to lead is high. Women have a signifi-
resources and services, business is well positioned to
cant opportunity to use their voice effectively to
address all types of human needs. Shifting the focus
catalyze, and even lead, this evolution in business
of business to long-term growth empowers corporate
strategy.
leaders to create value and sustain development over
the long-term. In fact, progressive business leaders The presence of women shapes business from the
have been innovating for nearly two decades to ad- inside-out and outside-in, from the MBA training
dress environmental, social, and governance issues. grounds to consumer to managerial levels. Though
beyond the scope of this paper, numerous studies
The ‘business case’ for sustainability has been estab-
have demonstrated women have proved to be more
lished through the creation of impacting social enter-
aligned with and desirous of corporate sustainability
prises, the pronounced differentiation of brands that
as MBA students, employees, consumers, and inves-
are more environmentally responsible and ethical,
tors. So the question remains: Can women at the
significant savings from adopting more energy-effi-
highest echelon of business decision-making and
cient practices, and the unmistakable acquisition and
agenda-setting influence business to be more finan-
retention of top talent who care about their employ-
cially, socially and environmentally sustainable? And
ers’ positive impact on society, to name just a few.
if so, how?
In 2011, the Washington, D.C.-based Conference
RESEARCHING FEMALE CORPORATE
Board published another influential report on sus-
DIRECTORS & CORPORATE SUSTAINABILITY
tainability.5 The report summarizes the “case” for
To fully understand the depth of impact that women
pursuing corporate sustainability for economic
can have on corporate sustainability, we investigated
growth into the following four categories:6
corporate performance of more than 1,500 compa-
1. Reducing costs and minimizing exposure to risks. nies across three main categories: environmental,
2. Differentiating a firm from competitors, resulting social, and governance (ESG). These three categories
in competitive advantages. provide an adaptable and clear-cut framework to

2 Women Create A Sustainable Future

 evaluate how and in what ways companies are pro- PURPOSE
gressing towards corporate sustainability and also The overall goal of our study was to analyze infor-
reflect the main content areas/ways that corporate mation to identify possible relationships and trends
sustainability recognizes. where the presence of more women on the board was
correlated with a greater corporate sustainability and
We used data from MSCI Inc. that evaluates industry-
ESG performance. It should be noted that we mean
specific risks and opportunities facing firms across
ESG issues. MSCI is the leading and only major index
provider with in-house ESG research expertise since The aim of this research was to
1972. The MSCI ESG data is collected in three phases:
(1) key issues are identified by industry, (2) risk expo-
prove whether or not firms with
sure and management strategies are evaluated, and higher numbers of women on
(3) companies are rated against sector peers. their boards are more proactively
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managing their ESG performance,
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and numbers of women on boards of directors for
and hence, improving the firm’s
each firm. Of the companies evaluated, 68% had at social, environmental and
least one female on their board. governance impact(s).
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carbon emissions, energy efficiency, water stress,
proactively managing ESG issues as part of business
biodiversity and land use, packaging materials, and
risk and opportunity on the front end, not after fail-
waste.
ing to do so becomes a massive emergency for a com-
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pany and requires crisis management and reaction on
include supply chain, labor, human capital develop- the back end. The aim of this research was to prove
ment, access to finance and healthcare, and oppor- whether or not firms with higher numbers of women
tunities in nutrition and health. on their boards are more proactively managing their
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ernance issues include corruption and instability, social, environmental and governance impact(s).
ethics and fraud, anti-competitive practices, and FINDINGS
corporate governance. The results below provide illustrative detail on the
Given limited data access and sources, we were un- correlative findings between women as directors, and
able to conduct regressions to determine causality. corporate sustainability performance:7
Furthermore, there are many additional variables ENVIRONMENTAL ISSUES
that must be controlled for in a regression, which we Companies with more women on their board of directors
were unable to collect for the entire sample. There- are more likely to be:
fore, it is important to note that our preliminary t

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invest in renewable power
exploration highlights correlative relationships. generation and related services.
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3 Women Create A Sustainable Future

 effects into their actuarial models while develop- care in developing countries and for under-served
ing products to help customers manage climate change populations in developed markets.
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provide strong employment benefits
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measure and reduce carbon emissions and performance incentives and offer employee en-
of their products throughout the value chain and gagement and professional development programs.
implement programs with their suppliers to reduce t

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offer products with an improved nu-
carbon footprint. tritional or healthier profile and have sought credible
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reduce the environmental verification for its healthier status.
impact of their packaging, including use of recycled t

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manage human capital
content material and establishment of take-back development through offering competitive benefit
and recycling programs. Specifically making efforts packages, implementing formalized training pro-
to get ahead of regulations and change consumer grams, and actively measuring employee satisfac-
demand by reformulating packaging, recovering tion.
products for recycling, and supporting recycling t

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offer products and services to commu-
where it is not mandated. nities with limited or no access to financial products.
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address the environmen-
Take for example, a company like Nestlé, which has
tal risks embedded in their financing decisions.
recently turned its focus toward creating shared val-
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proactive steps to manage and
ue with its product offerings in three areas: nutrition,
improve the energy efficiency of their operations.
water, and rural development. Nestlé uses science-
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do not disturb large
based solutions to improve the quality of life through
and/or fragile areas of biodiversity and have strategies
food and diet. This type of social initiative is well
to minimize and mitigate biodiversity losses.
aligned with corporate sustainability for Nestlé. Our
Consider, for example, Wal-Mart’s recent environ- research findings to date suggest that having more
mental initiatives. Wal-Mart has committed itself to women corporate directors is correlated with these
achieving zero waste by 2025, to reduce packaging types of strategies and outcomes. Nestlé’s Board of
by 5 percent globally by 2013, and to have globally Directors has three women.
neutral packaging practices by 2025. Companies like
GOVERNANCE ISSUES
Wal-Mart have already publicly committed to and are
Companies with more women on their board of directors
delivering on these types of goals. Our research find-
are more likely to be:
ings to date suggest that the presence of more women
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strong governance struc-
corporate directors encourages the proactive pursuit
tures, demonstrate a high level of transparency, and
of sustainable business practices and opportunities.
avoid large-scale controversy.
Wal-Mart has three women corporate directors on its
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board.
clear policies to avoid corrupt business dealings, have
SOCIAL ISSUES strong partnerships with local communities, and
Companies with more women on their boards of directors have high levels of disclosure and transparency.
are more likely to be:
SUMMARY
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The ESG trends identified above, along with previ-
for longer-term growth and protect their “license to
ous studies linking women at the top with higher
operate” through efforts to improve access to health-
management quality and higher financial return for

4 Women Create A Sustainable Future

 companies, are good business practices. This seems Our preliminary research served to heighten our
a highly desirable trend in today’s business world, curiosity around the specific ways women corporate
especially following the recent economic downturn directors have done and can promote corporate sus-
and waves of corporate misconduct, business failings, tainability. Our initial findings confirmed the pres-
and public mistrust of companies. ence of compelling trends that are in need of further
exploration. We would like to further tease out our
SUPPORT FROM FEMALE DIRECTORS
To better understand the data, we reached out to
female corporate directors on their experiences on
“Organizations benefit both
boards with ESG performance. Many of the women
we spoke with had already embraced this relationship from having more women on
with sustainability throughout their careers. Halla To- Boards and more women in the
masdottir, Executive Chair and Co-Founder of Audur
Capital in Iceland, told us “Women and sustainability are
C-suites. The voices of women
two sides of the same coin.” She went on to say “Corpora- are critical in advancing the
tions build better societies if they have balanced boards.” goals of corporate shared value.
We heard similar claims from the public and non- –Halla Tomasdottir, Executive Chair and Co-Founder
profit sector as well. Ann Veneman, the former of Audur Capital

Executive Director of UNICEF and the former U.S.

Secretary of Agriculture, shared her belief that findings with qualitative interviews with both male
“organizations benefit both from having more women and female corporate directors and leaders. Our
on Boards and more women in the C-suites. The voices of research also led us to wonder what actions could be
women are critical in advancing the goals of corporate taken to promote the placement of women corporate
shared value.” The relationship between concepts like directors and the use of their voice to enable corpo-
shared value, societal improvement, and women rate sustainability efforts.
corporate directors seemed to be emerging across the
TAKING ACTION
industries and sectors we examined. Ann serves on
Women Corporate Directors is a global membership
the board of Nestlé, as well as on Nestlé’s internal
organization with over 1,400 members who serve on
Corporate Shared Value committee.
1,550 boards, and is led by Susan Stoutberg. “WCD’s
Women currently serving as corporate directors also mission is to be a powerful and trusted community of
echoed a deep understanding of the value of sustain- women corporate directors strengthened by a focus
ability and their relationship to it. Dina Dublon, on development, diversity of thought and experience,
former EVP and CFO of JP Morgan Chase, and a education, new board placement opportunities and
Director of PepsiCo, Accenture, and Microsoft, stated a robust dialogue around best practices in corporate
“There is an element of self-selection for me. I choose to governance. Corporate governance today demands
serve on Boards who have openness to ESG issues because a world view,” she stated. Consequently, WCD has
I care deeply about these issues. It is important the com- issued a Plan of Action and established a Global
pany is measuring their performance and impact on ESG Nominating Commission to work with the Fortune
factors, and I hear the same view expressed by many- not 500, FTSE 100, and other top companies to increase
all- women in my Board circles.” diversity on their boards.

5 Women Create A Sustainable Future

 Building off of the powerful efforts of WCD to date, 4. Train male and female business leaders to be
we propose four critical next steps. We must: change agents. This is perhaps the most difficult,
yet most important, call to action. Both men and
1. Ask and answer more difficult questions, conduct
women corporate executives should be inspired
more research, and acquire more knowledge, to
and encouraged to advance both corporate sustain-
identify specific ways to help qualified women get
ability goals and the presence of women on boards.
on to corporate boards, and to get boards to value
The outcome will be positive for the company and
this ESG-focused leadership approach that women
for the world.
bring to the table.
Empowering women to foster sustainable growth
2. Continue to build a pipeline of women who can
should be a key area of focus for business schools,
serve on corporate boards and to expand the tal-
companies as they set employee goals and make hir-
ent pool. It is critically necessary to keep women
ing decisions, boards of directors as they steer the
engaged in MBA and graduate programs to acquire
course of their companies, and investment teams as
critical tools for leadership in business, includ-
they seek to invest in sustainable growth opportuni-
ing corporate sustainability and ESG strategy. We
ties. This issue should permeate all aspects of strate-
need to find ways to ensure that rising women see
gic business planning—all the time, every single day.
business as a force for positive social and environ-
mental impact, and that they remain within the This is not about simply having a woman present
powerful corporate sector and harness and influ- and at the table; this is about tapping into the talent
ence the power of the corporation toward corpo- and resources of 52% of the population and having
rate sustainability. multiple women at the table. This is about women be-
ing actively engaged in the process to renew trust in
3. Foster a business community of sponsors for
business and to help correct the unsustainable paths
females that includes both men and women. Those
we are currently charging down. This is about every
who are already there can clear a path for women
man and woman who leads in businesses actively
corporate directors and empower them to use their
fostering and encouraging every female to stand up,
authentic business voice toward corporate sustain-
authentically use her voice and her power, and play
ability. We need current female corporate directors
the significant role that she so aptly can on today’s
to bring ESG factors and corporate sustainability
global business stage.
to the board discussion table.

6 Women Create A Sustainable Future

 About the Authors
This study was supported by KPMG, in partnership with Women Corporate Directors (WCD). The research was
conducted by the following Haas School of Business authors:

KELLIE McELHANEY
Kellie McElhaney is the Whitehead Faculty Fellow in Corporate Sustainability and the Founder of the
Center for Responsible Business at the Haas School of Business at UC Berkeley. Her research is in the area
of corporate sustainability strategy, corporate sustainability and brand, and women, business leadership
in relation to sustainability. She is also the author of the book Just Good Business.

SANAZ MOBASSERI
Sanaz is completing her PhD at UC Berkeley’s Haas School of Business. Her background is in corporate
finance, specifically mergers, acquisitions, and capital raising transactions across a variety of industries
including consumer goods and diversified industrials. She also consulted for technology start-ups before
getting her MPP at the Goldman School of Public Policy at UC Berkeley.

About the Center for Responsible Business

The Center for Responsible Business is an “action tank” that builds on the Haas School of Business’ culture of
innovation and UC Berkeley’s tradition to run—not walk—towards social progress. Building upon nearly a
decade of research, teaching and industry engagement, the Center for Responsible Business brings together
students, company leaders, and forward-thinking faculty to redefine good business for a sustainable future.

For more information about this study, contact:

Kellie McElhaney, Whitehead Faculty Fellow in Corporate Sustainability

UC Berkeley, Haas School of Business
kmack@haas.berkeley.edu

7 Women Create A Sustainable Future

 1 Credit Suisse Research Institute. August 2012. Gender Diversity and
Corporate Performance. https://infocus.credit-suisse.com/data/_
product_documents/_shop/360145/csri_gender_diversity_and_cor-
porate_performance.pdf

2 Georges Desvaux, Sandrine Devillard-Hoellinger, and Mary C.

Meaney. September 2008. A Business Case for Women. The McKinsey
Quarterly. http://www.mckinseyquarterly.com/A_business_case_for_
women_2192.

3 Catalyst. January 2004. The Bottom Line: Connecting Corporate

Performance and Gender Diversity. http://www.catalyst.org/file/44/
the%20bottom%20line%20connecting%20corporate%20perfor-
mance%20and%20gender%20diversity.pdf

4 World Commission on Environment and Development. 1987. Our

Common Future. Oxford University Press.

5 The Conference Board Center of Sustainability. Sustainability Matters:

Why and How Corporate Boards Should Become Involved” October
2011. www.conferenceboard.org.

6 lbid.

7 Correlations range from 0.15-0.47.

8 Women Create A Sustainable Future