More women in leadership roles increase financial performance and corporate social sustainability

November 30th, 2011 by Catalyst

Researchers at Catalyst and Harvard Business School (HBS) suggests that what’s good for women is good for business and also for society as a whole.

According to Gender and Corporate Social Responsibility: It’s a Matter of Sustainability, companies with more women at the top may be better practitioners of corporate social responsibility (CSR). Prior Catalyst research has shown that such companies also financially outperform, on average, those with fewer women in senior leadership roles.

From left to right: Carol Steere, Guernsey's Education Minister; Sophie Tranchell, MBE, MD of Divine Chocolate Ltd; Reverend Mike Keirle; Michelle Johansen, Johansen Executive Coaching; and Debbie Smith, KPMG Channel Islands Ltd Executive Director, Audit; participate in a panel discussion "Does the west have something to learn from the developing world about the role women can play in business and politics?" held at Les Cotils Christian Centre on 12 October 2011 in celebration of Guernsey's 5th anniversary as a Fairtrade Island (click image to expand - ©RLLord)

“Companies are realizing that advancing more women to senior leadership roles has many benefits, including increased financial performance and sustainability,” said Anabel Pérez, Senior Vice President, Development, Catalyst. “As this study shows, inclusive leadership has a positive influence on the quantity and quality of an organization’s CSR initiatives. When business leadership includes women, society wins.”

Catalyst and HBS researchers found that companies with more women board directors and corporate officers contributed significantly more charitable funds, on average, than companies with fewer or no women in senior roles:

  • In 2007, the average donations of companies with three or more women directors were 28 times higher than those of companies with no women directors.
  • Between 1997 and 2007, companies with more women board directors donated significantly more funds than did companies with fewer women—with each additional woman board director representing an increase of 2.3 million dollars.
  • Companies with 25% or more women corporate officers in 2007 made annual contributions that were 13 times higher than those made by companies with zero women corporate officers.
  • Companies with more women corporate officers donated significantly more funds between 1997 and 2007, and for each percentage point increase in women corporate officers, yearly donations increased by 5.7 million dollars.

These higher contribution levels are demonstrably linked to having more women in senior leadership roles, not merely to the size of a company’s budget:

  • Controlling for key factors that might influence donation levels, such as a company’s overall financial performance, size, and industry, the presence of women leaders still had a significant positive impact on a company’s levels of giving.
  • Studies have shown that women leaders may bring diverse perspectives on fairness and the distribution of resources to donation decisions, which may in turn broaden a company’s commitment to CSR and increase its levels of charitable giving.

This study also indicates that companies with more women leaders are not only more committed, on average, to corporate social responsibility—they may also be better at it, in the sense that such companies are likely to develop higher-quality CSR initiatives. Leaders who highlight gender issues in CSR strategies often position their organizations for sustained growth—a payoff that extends from the company to communities and to broader society.

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Catalyst, which was founded in 1962, is the leading nonprofit membership organization expanding opportunities for women and business.

 

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