Abstract
Background: There is a growing volume of literature on corporate governance and corporate sustainability. Despite this, the linkage among a critical mass of board gender diversity (BGD), audit committee independence (ACI) and corporate carbon emissions is an unresolved issue.
Aim: The purpose of this study is to examine the impact of BGD and audit committee (AC) on (direct and indirect) carbon emissions (CO2) performance. This article paves the way for an understanding of how firm size can affect the relationship between critical mass of BGD, ACI and corporate sustainability performance (CSP).
Setting: The study sample has listed firms from the Group of Seven (G7) economies.
Method: The study uses the fixed effects regression. The outcomes are robust across different methods and measurements (e.g. System GMM, Blau’s Index).
Results: The article finds that a critical mass of BGD (≥ 20% female representation) drives corporate sustainability performance by mitigating the level of carbon emissions (direct, indirect and total), indicating that token representation of women on corporate boards limits their effectiveness. The outcomes also show the effectiveness of ACI in promoting carbon emission deduction. Further, the study finds that firm size moderates the relationship between the critical mass of BGD and CSP. Meanwhile, the study finds that the moderating effect of firms’ size on the relationship between ACI and CSP are statistically insignificant.
Conclusion: The article offers empirical evidence that the efficacy of the BGD critical mass and ACI in promoting CSP, offering valuable implications and insights for the policymakers to align their governance structures and regulations with sustainability goals.
Contribution: The current work makes a unique contribution to the current empirical literature by investigating the effect of firm size on the linkage among the critical mass of BGD, ACI and CSP.
Keywords: audit committee; gender diversity; critical mass; carbon emissions; firm size.
Introduction
Global warming and climate change, largely driven by increasing CO2 carbon emissions, are worsening at an alarming pace, threatening societies by affecting human populations and natural ecosystems (Kong et al. 2025). The significant increase in climate change underscores the imperative for nuanced, actionable research. Several empirical studies based on accounting and business theories suggest that mechanisms of corporate governance (CG) are essential for reinforcing corporate environmental performance (Oyewo 2023; Wang et al. 2025). The CG mechanisms such as BGD and AC may play a positive role in carbon emissions deduction by increasing the corporate disclosures, mitigating corporate liability exposure and enhancing sustainable practices such as adopting green innovation technologies (Goud 2022). In this way, the linkage among different mechanisms CG and CO2 emissions performance is gaining traction in accounting and business literature. The BGD and audit committees (ACs) can be particularly crucial in addressing environmental challenges (Terjesen, Aguilera & Lorenz 2015). In this context, this study aims to explore the impact of board gender diversity (BGD) and AC attributes on carbon emissions. Nevertheless, empirical work on the linkage between BGD and corporate carbon emissions is mixed. Some empirical studies (Barroso et al. 2024; Gull et al. 2025; Khatri 2024; Kreuzer & Priberny 2022; Oussii & Jeriji 2025; Rjiba & Thavaharan 2022) found that females on board are more committed to corporate carbon emissions reduction. These studies suggest that diverse corporate boards reinforce linkage among the management and the stakeholder due to their backgrounds and communication skills, leading to a positive impact on CSP. Conversely, other empirical studies (Liao, Luo & Tang 2015) indicated that BGD has a limited impact on decarbonisation. Despite the growing empirical literature on carbon emissions determinants, critical questions remain unanswered: (1) Do critical mass of BGD affect direct and indirect carbon emissions? (2) Does firm size affect the linkage among critical mass of BGD, AC characteristics and corporate carbon emissions? This study expands the scope of governance-sustainable performance studies and fills the gap in the literature in different ways. Firstly, several empirical studies have investigated the effect of CG on corporate carbon emissions (Alkurdi, Al Amosh & Khatib 2023; Arif et al. 2021; Konadu et al. 2022; Meqbel et al. 2025; Pozzoli, Pagani & Paolone 2022; Rjiba & Thavaharan 2022). Most of these studies ignored the role of the critical mass of BGD and AC characteristics on carbon emissions in G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom [UK], and the United States [US]). These economies represent more than 50% of the world’s global gross domestic product (GDP), accounting for 30% of worldwide fossil fuel energy use (Owolabi et al. 2024). Hence, using the G7 as a case study arises from their collective responsibility for global carbon emissions volume and global economic and financial development. On the other hand, the share of females in the representation of G7 firms increased significantly in the last years. Example, publicly listed firms in Italy must include a minimum of 40% female representation on their boards (UN Women 2020). Meanwhile, other economies, such as the UK, adopt a voluntary regulation to increase the share of females on boards. In this way, this study fills the gap by assessing the impact of critical mass of corporate BGD on carbon emissions in the context of G7 firms. Secondly, this study offers new insights by exploring the impact of firm size on the nexus between critical mass of BGD and corporate carbon emissions. Thirdly, this work contributes to the literature by offering evidence that the effectiveness of AC independence in promoting CSP does not depend on the firm size. Fourthly, this study uses various robust methods and proxies to examine the nexus between BGD and CSP. For example, the study employs a System Generalised Method of Moments (S-GMM) test to address unobserved heterogeneity and endogeneity and Blau’s Index (BI) as an alternative measure of BGD for robust outcomes. The rest of the work is structured as follows: ‘Literature review’ section shows the empirical literature and development hypotheses. ‘Methods’ section presents the data and method. ‘Results and Conclusion’ sections present the findings of the work and the conclusion, respectively.
Literature review
Theoretical framework
According to agency theory, firms need to enhance their CG pillars to decrease agency conflicts among corporate management and stakeholder interests (Jensen & Meckling 1979). The most significant pillars of the CG framework are BGD and AC (Terjesen et al. 2015). In this context, several theories explain the role of corporate BGD and AC on CSP, such as social role theory, agency theory, stakeholder theory, legitimacy theory and critical mass theory (Oussii & Jeriji 2025). In this way, the social role theory argues that female leaders have natural characteristics, such as sensitivity and compassion for environmental issues more than male leaders (Aliani 2023). Drawing on this theory, Liu (2018) suggested that firms with greater female representation on the board are less sued for environmental regulation violations, probably due to ethical performance shown by female directors. The legitimacy theory suggests that firms are required to carry out their business activities in line with the norms prevailing in their societies (Wahyuningrum, Oktavilia & Utami 2022). Hence, the firms must have some accountability towards society. In this way, the firms should act responsibly and maturely to meet stakeholders’ expectations. Drawing on legitimacy theory, Akhter et al. (2023) argue that more BGD can accelerate firms’ reputation by enhancing corporate environmental responsibilities. The stakeholder theory suggests that the appointment of female managers in firms would reinforce the decision-making process and enhance communication among corporate board members, thereby affecting the CSP (Lara et al. 2017). The study’s theoretical framework is based on stakeholder theory, which helps to identify and understand the link between BGD, AC attributes and CSP (Oyewo 2023). According to this theory, the lack of corporate female representation and AC disclosures could be viewed as an adverse sign, as it may lead to a conflict of interest. Thus, female directors and AC can play a critical role in stimulating the CSP (Zhang, Zhu & Ding 2013). In this way, the firms may face pressures from stakeholders to increase the female representation on their boards and enhance corporate transparency to sustain their performance (Caby, Coron & Ziane 2022; Elleuch Lahyani 2022). Thus, BGD can play a positive role in promoting CSP by reducing their consumption of non-renewable resources and adopting more environmentally friendly technologies (Aliani 2023). In addition, the study is based on the critical mass theory to understand the critical mass of BGD on CSP. The essential idea of the critical mass is that the impact of BGD on corporate performance increases when their number reaches a specific threshold (Kanter 1977). Hence, this theory assumes that a critical mass of BGD ensures that their diverse experiences and skills are considered in formulating the firm policies and strategies, which in turn may affect CSP (Glass, Cook & Ingersoll 2016).
Critical mass of board gender diversity and carbon emissions
In line with stakeholder theory, several empirical papers have found that higher BGD in firms can play a positive role in mitigating the level of carbon emissions. Liu (2018) argues that firms with good female representation face fewer lawsuits for ecological issues and misconduct. Velte (2024) suggests that female managers are more aware about the needs of stakeholders, particularly about environmental issues. Konadu et al. (2022) argue that BGD is an important issue for reinforcing eco-innovation and sustainable practices. In testing the linkage among BGD and carbon emissions, Rjiba and Thavaharan (2022) suggest that BGD drives the reduction of carbon emissions in 43 selected economies. Recent studies conducted by Khatri (2024) in the case of UK firms, Oussii and Jeriji (2025) in the case of French firms and Gull et al. (2025) in the context of 36 selected countries found a positive role of BGD in mitigating the level of carbon emissions. Conversely, Alkurdi et al. (2023) used a sample of 1621 European companies from 2017 to 2021 and found that an increase in BGD increases the level of carbon emissions in these economies. In conclusion, several studies suggest that higher BGD is more effective in making decisions at board meetings, which in turn impacts corporate performance. However, the critical mass theory assumes that a certain threshold of minority group representation in the corporate sector is necessary to reinforce their role in the firm (Pathiranage, Waheduzzaman & Dayarathna 2025). Before reaching this threshold, minority groups are perceived as ‘tokens’ in firms under the control of majority male board members. The thresholds for female on board representation can be captured as numbers such as ‘two or more’ members (Iqbal & Saeed 2025) or as a percentage of total members such as more than ‘10 or 20’% (Burkhardt, Nguyen & Poincelot 2020). Recently, some studies have examined the role of the critical mass of BGD on CSP. Toukabri and Jilani (2023) used a sample of US firms listed from 2011 to 2018 and found that a critical mass of female leaders positively affects carbon emission deductions. Al-Shaer, Zaman and Albitar (2024) used a sample of UK firms from 2011 to 2019 and found that BGD critical mass contributes to CSP by improving ESG performance:
H1: The critical mass of BGD significantly affects carbon emissions.
Audit committee independence and carbon emissions
The current empirical studies show that AC attributes can reinforce the reliability of financial reports and align firms’ decisions with stakeholders’ interests, leading to promoting CSP (Alkurdi et al. 2023; Arif et al. 2021; Meqbel et al. 2025; Pozzoli et al. 2022). In this context, Arif et al. (2021) found that a positive role of AC independence in enhancing the ESG ratings. Pozzoli et al. (2022) also support the AC independence reinforces ESG performance. According to Pozzoli et al. (2022), AC-independent members guarantee better monitoring activities in firms, leading to the adoption of more sustainable practices. Alkurdi et al. (2023) suggest that AC independence plays a positive role in mitigating the level of CO2 emissions among European companies. Meqbel et al. (2025) argue that AC independence has a positive effect on environmental disclosure, underscoring the importance of AC independence in reinforcing the company transparency and accountability regarding ecological performance. These studies suggest that ACI can promote CSP by establishing robust internal control systems within company, thereby mitigating business risk.
H2: AC independence significantly affects carbon emissions.
Impact of firm size
Small and large firms may differ in their implementation of governance practices, leading to different impacts on the CSP. In this context, Agnese et al. (2025) suggest that smaller firms frequently encounter obstacles, such as a lack of sustainability expertise or limited financial resources. Meanwhile, larger firms may struggle to balance the needs of different internal and external stakeholders. Chen et al. (2026) highlighted that large firms have more capabilities to promote CSP strategies, such as more capital access, and efficient technological support and teams. These capabilities can help these firms to implement more CSP practices. Empirical studies suggested that firm size affects the effectiveness of AC and BGD. In this way, Kwamboka, Githaiga and Kinuthia (2025) suggested that firm size affects a firm’s internal CG, potentially influencing the scope of auditing. For instance, large firms may require more auditing efforts and processes than smaller firms. Joecks, Pull and Vetter (2013) found that critical mass of about 30% women is positively linked with higher firm performance. The author found this threshold is more observed in larger firms. On the other hand, some studies assessed the impact of firm size on CSP. For example, Ahmad, Mobarek and Raid (2023) used data from 2002 to 2018 in the context of 351 UK companies and found that firm size moderates the linkage of financial crisis and CSP. Al-Sarraf, Al-Swidi and Al-Hakimi (2025) used UK firms spanning 2011–2021 and found that the influence of BGD on corporate performance varies by the company size. Qureshi et al. (2020) argue that larger firms may have the capacity and financial source to invest more in sustainability activities, leading to higher CSP score. Most of these studies ignored the role of firm size on the nexus among critical mass of BGD, ACI and carbon emissions. To the best of the author’s knowledge, the present work is the first in the literature that assesses the effect of firm size on this relationship.
H3: Firm size moderates the linkage between the critical mass of BGD (≥ 20%) and corporate carbon emissions.
H4: Firm size moderates the linkage between the ACI and corporate carbon emissions.
Methods
Data and sample
This work aims to explore the effect of BGD and AC characteristics on carbon emissions performance in the context of G7 firms. The empirical analysis of this work is based on a final sample of 2180 non-financial listed firms over the period from 2015 to 2024, drawn from an initial dataset of 13 829 firms. After excluding firms due to missing data, the refined final sample includes 10 592 firm-year observations. We exclude financial firms because their financial structures, processes and requirements differ significantly from non-financial firms. In particular, financial firms operate under different regulatory and disclosure frameworks. Excluding financial firms enhances the clarity and reliability of the study findings. In addition, firms with missing data were dropped from the sample, such as CG, CO2 emissions and financial information. In addition, we have excluded firms that do not have data in 2022, 2023 and 2024. Table 1 reports the number of observations per country and industry. The study’s data (CO2, AC characteristics, BGD and firm size) are collected from the London Stock Exchange Group website (LSEG) database. Gross domestic product is collected from the World Bank Database.
| TABLE 1: Sample distribution of the study across countries and industries. |
Variable measurement
CO2 emissions
The corporate carbon emissions (Scope 1 and Scope 2) are obtained from the London Stock Exchange Database (Refinitiv). Scope1 captures the CO2 emissions generated from the use of fuel and chemical processing from sources controlled by the firms. Scope 2 is indirect CO2 emissions linked with the purchased electricity production (Toukabri & Jilani 2023).
Independent variables (board gender diversity and audit committee)
The main independent variables of this work are corporate BGD and AC characteristics. We use the share of females to the total number of corporate board members as a proxy for BGD (García-Meca & Martinez-Ferrero 2025). On the other hand, we use AC-independent members, which captured by the share of independent members in the AC to total number (Alkurdi et al. 2023).
Control variables
The characteristics of the firm and certain governance variables are considered in the construction of the tested models. In line with previous empirical studies, we use the ratio of independent directors to total board directors as a proxy of independent board members (IBM). On the other hand, we control the firm leverage and size, which are captured by dividing the total corporate debt by total assets (Meqbel et al. 2025). These variables are included because existing empirical papers illustrated that capital structure may affect CSP. In addition, our control variables include firm size and capital expenditures, captured by the logarithm of the total assets and total expenditures, respectively (Akermi & Ben Amar 2025). We use the natural logarithm market value (in thousands) to capture the market value, as this value may positively influence CSP (Donkor et al. 2025). Finally, we use the logarithm of GDP in USD as a proxy to measure the economic growth; we use GDP in USD instead of economic growth rates because carbon emissions may be fundamentally tied to economic scale and production volume.
Econometric model
To assess the impact of critical mass of BGD and ACI on carbon emissions (direct, indirect and total), the following econometric model is formulated as follows (Equation 1):
To assess the impact of firm size on the linkage between critical mass of BGD, ACI and carbon emissions, the following econometric model is formulated as (Equations 2 and 3):
In the above equations, i and t represent firms and the time horizon (year), α means the slope of the selected independent control variables and the constant. CO2 total represents total carbon emissions, CO2 direct are and CO2 Indirect are direct and indirect CO2 emissions, respectively. Critical mass of Board Gender Diversity (BGD) and Audit Committee Independence (ACI) are the main independent variables of this study. Independent board members (IBM), board size (BS), firm leverage (FL), capital expenditures (CE), market value (MV), firm size (FS), and GDP are control variables in this study. Independent board members and BS are independent board members and board size, respectively. FL, CE and MV represent firm leverage, capital expenditures and market value, respectively. FS and GDP in the above equation represent firm size and country GDP, which is captured by total GDP in USD. The summary of the variables measurements and sources are reported in Appendix 1 Table 1-A1. To examine the study hypotheses, we used the fixed effects method to estimate the coefficients. This approach controls time-invariant unobserved heterogeneity. The article uses Hausman assessment to evaluate whether a fixed effects or random effects method is suitable for testing the models. The findings of this assessment displayed in Table 3 show that p-value of Hausman assessment is significant, suggesting that the fixed effects model is the relevant model (Meqbel et al. 2025). Further, we use robust standard errors clustered at firm level. Besides, we use firm and year fixed effects. The firm fixed effects aim to absorb time-invariant unobserved heterogeneity (Zhang et al. 2026). While year fixed effects control for common macroeconomic conditions, changes regulations and aggregate shocks affecting the firms in a given year. All the focused variables of this work are winsorised at ‘1% and 99%’ levels to delete the effect of outliers and decrease the effect of abnormal values. We performed all tests and regressions in STATA version 16.
Ethical considerations
This article followed all ethical standards for research without direct contact with human or animal subjects.
Results
Statistical analysis and correlation
The summary of descriptive statistics (Table 2) shows that the mean total carbon emissions value (in log) is 10.816, with a standard deviation of 2.097. Additionally, the outcomes indicate that the means of AC-independent members and AC financial expertise are 50.985 and 53.932, respectively. Table 2 also indicates that mean of BGD in G7 economies is 25.279%, suggesting that these countries have a good representation of female compared to other economies such as OECD (Farhan et al. 2025). Furthermore, Appendix 1 Table 2-A1 reports that correlation coefficients (BGD, ACI, ACE, IBM, BS, FL, CE, MV, FS, CSRS and GDP) with carbon emissions (CO2) are lower than 0.80, suggesting multicollinearity may not be an issue because the associations between the predictors were below the criterion of 0.80. Multicollinearity between the variables can be observed when the VIF value for each variable is more than 10 (Cheng et al. 2022). According to Appendix 1 Table 2-A1, all the variables are lower than ‘10’, implying the absence of multicollinearity in the tested variables.
Results of multiple regression
Table 3 reports the fixed effects outcomes. In column 1 of Table 3, the regression outcomes report the impact of BGD and selected control variables on carbon emissions (direct, indirect and total emissions). Board gender diversity in column 1 is negative (0.035) and significant at the 1% level, suggesting that a 1% point increase in the percentage of the female on board is associated with a 0.035% reduction of CO2 emissions. These outcomes are in line with the theory of stakeholder, which suggests that more BGD can positively affect CSP by reinforcing the communication among the corporate board members. Hence, these findings suggest that female leaders are more likely to be involved in green activities and projects that mitigate harmful environmental effects than males. The outcomes support the works of Rjiba and Thavaharan (2022) and Kreuzer and Priberny (2022), which suggest that BGD drives CSP in different selected countries by mitigating the level of CO2 emissions performance. We estimated nonlinear linkage using a spline model with knots at 10%, 20% and 30%. The spline results (column 1 of Appendix 1 Table 3-A1) show that coefficients of BGD-S (≤ 10%) and BGD-S2 (10% – 20%) segments are insignificant. Meanwhile, the coefficients for the 20% – 30% and > 30% segments are positive and statistically significant. These findings suggest that critical mass of BGD is reached approximately 20% and remains significant beyond 30%. Further, we then re-estimated a threshold model separately (Appendix 1 Table 3-A1 panel II and Table 3). In columns 2–4 of Table 3, we report the impact of critical mass of BGD (captured as a dummy variable, 1 if female representation ≥ 20% and 0 otherwise) on carbon emissions (direct, indirect and total emissions). The outcomes illustrate a significant and negative linkage among critical mass of BGD and carbon emissions, suggesting that firms with at least 20% female representation in the board are associated with carbon emissions reduction. To further examine the critical mass hypothesis, we have tested the impact of female representation in the board below 20% on carbon emissions. The findings show that the effect of female representation below 20% has a limited effect on CSP, supporting that token representation of women (female representation in the board with < 20% representation) limits their effectiveness in promoting CSP. These outcomes are in line with the theory of critical mass, confirming that a critical mass of BGD reinforces monitoring efforts, supports firm value and stimulates innovative practices. These findings also support prior empirical literature, which suggests that there is a threshold for the number of women directors needed to reinforce the CSP (Birindelli, Iannuzzi & Savioli 2019; Nuber & Velte 2021). For example, the findings are in line with Nuber and Velte (2021), who argued that a critical mass of BGD has a more powerful impact on carbon emissions performance in non-financial firms in Europe and Birindelli et al. (2019) who confirmed that a critical mass of BGD is a driver of CSP. On the other hand, the findings from Table 3 show that ACI has a negative and significant effect on corporate carbon emissions in the tested countries (direct, indirect and total emissions). These findings suggest that the more independent AC members promote CSP. More specifically, the coefficient of ACI in column 1 is negative (0.007) and statistically significant at the 1% level, suggesting that a 1% point increase in ACI is associated with a 0.007% reduction in direct and indirect carbon emissions, and these findings suggest that the second hypothesis is supported in context of G7 firms. These outcomes corroborate with the prior empirical literature. For example, Meqbel et al. (2025) and Alkurdi et al. (2023) confirmed the positive role of ACI in promoting CSP in European firms. However, the significant and positive linkage connection among ACI and CSP performance affirms that the more ACI members reinforce monitoring and control activities to meet the stakeholder interests and needs. These outcomes are in line with stakeholder-agency theories, which suggest that firms need to enhance CG mechanisms.
| TABLE 3: Impact critical mass of board gender diversity and audit committee independence. |
Moving to control variables, we found that both independent board members and board size have an adverse effect on CSP, increasing the level of carbon emissions (direct, indirect and total). In addition, the findings show that firm leverage has an insignificant effect on direct CO2 emissions performance. Further, we found that increasing capital expenditures and total assets in firms increases the level of carbon emissions. On the other hand, the study shows that an increase in the country’s economic growth has limited effects on the level of corporate carbon emissions. Besides, the study finds that market value has a limited effect on indirect carbon emissions. The findings also find the financial leverage has a limited effect on direct carbon emissions.
Table 5 shows the moderating effect of firm size on the linkage between critical mass of BGD and carbon emissions (direct, indirect and total). The outcomes show that firm size moderates this linkage, suggesting that the third hypothesis of this study is supported in the context of G7 firms. These outcomes may be attributed to the fact that the larger firms face stronger monitoring and scrutiny by the governments and the stakeholders to adopt more governance practices (Githaiga, Muturi Kabete & Caroline Bonareri 2022), which in turn lead to an increase in the share of BGD in their firms, and increases their effectiveness role in decision-making process. Subsequently, it leads to promote CSP. These findings align with Abdullah, Ardiansah and Hamidah (2017), who argue that larger companies have stronger boards, characterised by higher representation of women on their boards. Furthermore, the findings show that the coefficient of FS*ACI is negative and insignificant, highlighting that the moderating effects of firms’ size on the linkage between ACI and CSP is statistically insignificant. These findings suggest that the fourth hypothesis of this study is not supported in the case of G7 firms. These findings suggest that ACI can play a positive role in mitigating the level of carbon emissions, regardless of firm size, underscoring the importance of ACI in stimulating CSP. These findings could be attributed to ACI that plays a significant role in enhancing the transparency and accountability about the sustainable practices in the firms regardless of the firms’ size. Increasing ACI members may mitigate the levels of the conflicts between the companies and their shareholders, thereby enhancing the alignment of management interests with shareholders’ interests, which in turn will sustain corporate performance regardless of the firm size.
Robustness checks and additional tests
We use the S-GMM to offer more robust findings and confirm the main findings of this study. This method is a consistent and efficient approach to address the endogeneity issue, which arises from the correlation among the lagged dependent variable and the error term (Kitulazzi et al. 2025). The study uses the Arellano–Bond (AR) and Hansen assessments to evaluate the instrument variables’ validity in S-GMM. Hansen’s test aims to confirm that the external independent variables in the tested models are uncorrelated with the errors. The AR aims to evaluate and detect any autocorrelation in the tested model (Assfaw & Sharma 2024). The findings from Table 4 report that the p-values of the AR (2) are statistically insignificant, which confirms the absence of autocorrelation. Furthermore, the p-values of Hansen’s tests are insignificant, confirming the instrumental variables are valid. The S-GMM findings are displayed in Table 4. The lag of dependent variables (CO2 Total, CO2 Direct and CO2 Indirect) is significant, suggesting persistence in carbon emissions over time (Assfaw & Sharma 2024; Okoyeuzu et al. 2021). After addressing the endogeneity, the findings show that the coefficients of BGD and ACI remain negative and significant, confirming the positive role of BGD and ACI in driving CSP. To affirm the main findings of this study, we have used several tests. In this way, we have assessed the impact of critical mass of BGD and ACI on carbon emissions scaling by capital expenditures. The findings from column 1 of Table 6 shows that critical mass of BGD and ACI adversely affect the level of carbon emissions scaling by capital expenditures. On the other hand, the share of female on board may show a high degree of homogeneity in terms of board gender. In this way, we use the BLAU index as an alternative measurement of BGD, which takes into account the maximum value when each category share is at a maximum. This proxy ranges from ‘0 to 0.5’. The findings from Table 6 show that the BLAU coefficient is negative, confirming the positive role of BGD in sustaining the CSP in the context of G7 countries. In addition, we have examined the moderator role of CSR strategy on the nexus among critical mass of BGD and carbon emissions. The findings from column 4 of Table 6 show that CSR strategy moderates the nexus among critical mass of BGD and carbon emissions, highlighting the importance of sustainable strategy practices in promoting CSP. In addition, we have examined the impact of AC financial expertise on carbon emissions, and we found that AC with financial expertise mitigates the level of corporate CO2 emissions. These findings highlight the importance of the AC committee in mitigating the level of carbon emissions performance in the context of G7 firms.
| TABLE 4: Robustness test system generalised method of moment. |
| TABLE 5: Moderator effects of firm size. |
Conclusion
This article examines the impact of critical mass of BGD and ACI on corporate CO2 emissions using data from G7 countries from 2015 to 2024. This study bridges the gap in the literature by exploring the impact of firm size on the linkage between the critical mass of BGD, ACI and corporate CO2 emissions (direct, indirect and total) in the context of G7 economies. Using different methods and measurements, including fixed effects, GMM and Blau’s Index, we found that more BGD in the firms induces a reduction in carbon emissions (direct, indirect and total), offering empirical support for the stakeholder’s theory. These findings suggest that females in caproate board tend to adopt green environmental practices that mitigate corporate harmful effects on the environment more than men. Furthermore, the outcomes of this work support critical mass theory by suggesting that a critical mass of BGD (≥ 20% female representation) has a positive effect in stimulating CSP. These findings suggest that women’s representation in the firm must reach a critical proportion to reinforce their role in promoting the CSP. Further, the findings show firm size moderates the linkage between critical mass of BGD (female representation > 20%) and CSP, suggesting that larger firms face significant pressures from stakeholders to adopt sustainable practices and governance than smaller firms. On the other hand, the outcomes indicate that ACI has a positive impact on CSP. This impact does not depend on firm size, suggesting that ACI can play a significant role in promoting CSP, regardless of the firm’s size.
Based on the study findings, we propose the following recommendations for enhancing CSP:
- Firstly, the study suggests that firms with more female representation on boards are better at committing to and effectively promoting carbon emissions reduction in their operational and production processes. Hence, the firms should set up effective governance regulations by having effective diverse boards to promote sustainable business practices.
- Secondly, the study finds that a critical mass of BGD increases female effectiveness in promoting CSP, suggesting that a token representation of women members on the board does not promote CSP. Hence, the study suggests that policymakers should encourage the share of females on boards not only to meet the regulatory requirement of appointment but also to increase their effectiveness in promoting CSP. Their effectiveness could be strengthened by setting targets for BGD and linking the BGD with corporate carbon emissions reduction initiatives.
- Thirdly, the study finds that AC independence has a significant role in promoting CSP. Policymakers should establish independent and robust ACs to encourage the strengthening of CSP and governance structures. These committees should promote quality and quantity of corporate sustainable disclosures by enhancing transparency and environmental disclosure through mandatory reporting requirements, which encourage substantive rather than symbolic compliance with governance standards.
- Fourthly, the study suggests that firms should align their governance structures with sustainability goals by designing sustainability strategies and initiatives, including carbon emissions reduction efforts, energy efficiency measures and sustainable sourcing practices. On the other hand, governments should design financial incentive schemes to encourage firms to adopt more green practices and projects.
This study has the following limitation: Firstly, the data limitation regarding BGD characteristics does not allow for analysing the characteristics of BGD on carbon emissions. This could further provide valuable insight into which attributes of BGD affect CSP. Secondly, the study focused on the G7 over the period from 2015 to 2024. Future studies could enrich this by testing other countries or panels, if the data permit. Thirdly, the study highlights the importance of company size and the critical mass of BGD in promoting CSP. Future studies can assess the impact of the critical mass of other types of diversity, such as cultural diversity.
Acknowledgements
Competing interests
The author declares that no financial or personal relationships inappropriately influenced the writing of this article.
CRediT authorship contribution
Ahmed Samour: Conceptualisation, Data curation, Formal analysis, Funding acquisition, Investigation, Methodology, Project administration, Resources, Software, Supervision, Validation, Visualisation, Writing – original draft, Writing – review & editing. The author confirms that this work is entirely their own, has reviewed the article, approved the final version for submission and publication and takes full responsibility for the integrity of its findings.
Funding information
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Data availability
The data that support the findings of this study are available on request from the corresponding author, Ahmed Samour.
Disclaimer
The views and opinions expressed in this article are those of the author and are the product of professional research. They do not necessarily reflect the official policy or position of any affiliated institution, funder, agency, or that of the publisher. The author is responsible for this article’s results, findings, and content.
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Appendix 1
| TABLE 3-A1: Assessing the critical mass of females on board. |
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