Women on boards and ESG washing behavior: global evidence from the banking sector

Purpose This study aims to explore how women on boards (WOB) mitigate environmental, social and governance (ESG) washing within the global banking sector. By examining all three ESG pillars, the authors aim to understand how board gender diversity influences ethical behavior in banking practices. Design/methodology/approach Data from 607 publicly listed banks across 61 countries between 2011 and 2023 were examined. An unbalanced panel data analysis with a fixed-effects model and robustness tests was used to investigate the relationship between female board representation and ESG washing. The analysis encompassed overall ESG washing scores and individual scores for each ESG pillar, providing a comprehensive assessment. Findings Greater female representation on boards significantly reduces ESG washing practices significantly. A nonlinear relationship between these variables is identified, aligning with the critical mass theory. These results suggest that increasing female representation on corporate boards enhances corporate governance and promotes ethical behavior within the banking sector. Research limitations/implications This study provides valuable insights, but certain limitations warrant further exploration. Focus on the banking sector limits the findings’ generalizability to other industries. The role of sustainability assurance, which strengthens the relationship between board diversity and ESG reporting, remains unexplored. Regional variations underscore the need to further investigate the cultural and institutional factors influencing this relationship. Practical implications This study highlights the benefits of board gender diversity for financial regulators, policymakers and banking institutions. Enhancing WOB representation can help curb unethical practices, reinforce market integrity and bolster investor confidence in sustainable investments. Originality/value This research contributes to the growing body of literature on gender diversity and ESG practices with empirical evidence on WOB’s role in mitigating ESG washing practices. These findings offer theoretical and practical insights into fostering ethical and sustainable business practices within the banking industry.