Diversity Helps: Studying shows that more women on the board can improve how they manage their business

The evidence is clear despite large multinational companies such as Goldman Sachs, Paramount and Google removing diversity, equity and comprehensive policies. Having a diverse team helps businesses make better, more empathetic decisions.

At the top level, many studies of corporate committee women having more women will improve decision-making, stronger governance, and environmental, social and governance (ESG) performance.

However, progress remains slow in New Zealand. We are highly ranked on the Human Development Index, but the country is lagging behind gender equality in leadership.

Women make up 50.8% of the population and 40.8% of the Congressional leadership role. However, they hold only 28.5% of the board and 26.4% of the executive roles in the top 50 companies (NZX50) of New Zealand’s Stock Exchange (NZX).

Additionally, businesses are encouraged to disclose NZX’s gender diversity policy, but there are no mandatory assignments and the progress is uneven.

But there is a change. Our new study examined the proportion of female directors in NZX listed companies between 2016 and 2022.

What we found was positive. Information from the financial infrastructure and data provider LSEG’s global financial market database was used to identify an increase in the number of female directors on the Corporate Committee. We also saw improvements in response to the company’s ESG performance.

Performance improvements

Between 2016 and 2022, the proportion of female directors at NZX listed companies increased from 26% to 36%. These same businesses have improved ESG performance by an average of 33%.

In particular, one of the major ESG pillars – governance has improved significantly, increasing on average by 31%. Governance specifically refers to the effectiveness of a company’s management system, the structure of its board, and the ability to protect the interests of its shareholders.

Although it cannot be entirely said that being on the board had a direct impact on governance outcomes, there was a positive relationship between the two. This suggests that more women in leadership will strengthen corporate surveillance and ethical decision-making.

Gender diversity does not have the same level of importance in all contexts. Social and environmental performance was also improved, but in this study there was no significant link between the gender twin committee and these high scores of social and environmental performance.

Our findings are supported by international studies that suggest that committee diversity does not strongly affect sustainability outcomes with regard to issues and groups already covered by law.

Therefore, proactive attitudes towards issues such as the environment, poverty and human rights in New Zealand, and encouraging private companies to improve sustainability and transparency may explain why board diversity had no significant impact on social and environmental performance in this study.

What women bring to business

Our findings are consistent with research completed overseas.

In the US, one study found that women business leaders tend to prioritize transparency, equity and stakeholder interests. This made them strongly support sustainable and inclusive business practices.

It is clear that fairness isn’t just about addressing the gender gap in New Zealand businesses. It’s about financial success. Companies that employ diversity perform better, attract the best talent and boost their reputation.

This solution not only enforces quotas, but also ensures that more qualified women are placed in leadership roles. Companies need to move beyond the “compliance mindset” and realize that true diversity strengthens governance, reduces risk and promotes long-term success.

As the world celebrates International Women’s Day on March 8th, businesses need to realize that increasing the representation of women at the top is not the right thing to do. That’s wise.

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