Climate Change Initiatives, Environmental Management Training, and Firm Performance: The Trickle‐Down Effect of Board‐Level Gender Diversity on Gender Diversity in the top Management Team

ABSTRACT We examine the interrelationships among climate change initiatives, environmental management training, and firm performance while considering the trickle‐down effect of board‐level gender diversity on gender diversity in the top management team (TMT). Using an unbalanced panel dataset of 117,410 firm‐year observations from five regions, representing 11 industries and operating in 71 countries from 2013 to 2022, our findings reveal that climate change initiatives significantly enhance firm performance. Our results further exhibit that the interaction effects of gender diversity at the board and TMT levels (the trickle‐down effect) support climate change initiatives by encouraging environmental management training (EMT), thereby improving firm performance. To address the potential endogeneity issues, we employed a two‐step system generalized method of moments (GMM) approach. Our empirical results are robust to endogeneity and alternative measures. Overall, our evidence supports the Resource‐Based View Theory and Upper Echelon Theory to demonstrate how a diverse TMT and board members can contribute to more robust climate change strategies by using EMT as a resource to achieve performance objectives. Hence, we make important contributions to the corporate governance and environmentalism strands of the literature by highlighting the role of gender in shaping climate change initiatives and influencing firm performance.