The impact of board gender diversity on green building practices: Moving beyond traditional linear and logistic specifications

Abstract This article examines the relationship between sustainability and gender equality by analyzing how the percentage of women on the board of directors (still less than 50% in most cases) influences a company's commitment to green building practices. For this analysis, we estimate 30 competing multivariate pooled and panel data logistic specifications, including the gender diversity factor in both its traditional and polynomial forms. This methodological innovation (the polynomial form) allows for the examination of gender diversity's relationship with other variables beyond conventional models that assume constant effects, thus enabling a more realistic depiction of impacts that vary with the degree of diversity. Our dataset includes companies listed on the Euro Stoxx 300 and Standard & Poor's 500 for the period 2010–2021. The findings indicate that, in both indices, an increased percentage of women on the board (and a higher Blau diversity index) correlates with a greater propensity for sustainable building practices, up to a threshold nearing parity. The impacts are more significant in Europe than in the U.S., where board gender diversity appears to have a lesser influence on green building initiatives. The specification that best models the relationship between sustainable building practices and gender diversity, along with other relevant factors, is a multivariate panel data logistic model with the gender diversity factor included as a cubic polynomial for companies listed on the Euro Stoxx 300. A similar model, but with the gender factor in a quadratic polynomial form, was selected for companies listed on the Standard & Poor's 500. Therefore, the impact function of gender diversity on sustainable building practices is not constant but depends on the existing degree of board gender diversity, with the shape of the impact function differing between Europe and the U.S. Additionally, the study finds that other board characteristics—larger boards, longer tenures of directors, and higher compensation for senior executives—are associated with an increased propensity towards green practices in both the European and U.S. contexts. Conversely, linking CEO compensation to shareholder returns reduces this propensity. Moreover, the number of non‐executive directors and the overlap between the Chairperson and CEO positions do not significantly impact this propensity.