Bank board diversity and environmental risk management: does critical mass matter in project finance decisions?

Purpose This study investigates the influence of board gender diversity on policy decisions within the banking sector, with a specific focus on the adoption of environmental risk management policies. Drawing on critical mass theory, we provide empirical evidence demonstrating the positive impact of women directors on the implementation of environmental risk management policies aligned with the equator principles (EP) framework. Design/methodology/approach We analyze data from 540 banks operating in 34 countries over a ten-year period (2013–2022). Findings Our findings indicate that banks with at least four women directors on their boards are more likely to adopt such policies. Our results remain statistically significant after controlling for endogeneity issues. Practical implications This research advocates for increased female representation on bank boards to foster the adoption of sustainability-focused policies within the banking industry. Originality/value We also contribute by providing insights into the role of a diverse board in improving green credit practices among global banks.