Experience level: 
Intermediate
Intended Audience: 
All
Speaker(s): 
Anne Reilly
Authors: 
Anne H. Reilly, Anna Chudzinski, Deanna Cabada

Innovation in Sustainability Leadership: Governance and Gender Diversity

Environmental preservation. Responsible community development. Fair labor practices. These sustainability goals mirror Ignatian values, reflecting the intersection of Jesuit principles with sustainability issues in the business world. Sustainability has emerged as a competitive challenge requiring innovation; for example, Laurence Fink, the CEO of BlackRock (the world’s largest money manager), recently called on company leaders to consider the societal impact of their businesses in their strategic planning. Companies have responded in multiple ways, including publishing corporate social responsibility (CSR) reports and participating in the Global Reporting Initiative (GRI). Corporate performance metrics have been expanded to include sustainability measures in addition to financial results. Innovative firms are also adapting their executive governance structure to provide sustainability leadership. Empirical research here is growing, and one intriguing feature is the gender diversity in this domain. Although the numbers are small, the proportion of women in sustainability leader roles appears notably higher than for women in other top management positions (who still represent only about 25% of senior level managers at S & P 500 firms). These women innovators are guiding companies in developing sustainability policy and in allocating resources toward sustainability initiatives. In this empirical study, we examine sustainability leadership in n=107 global firms across eight industries: food, software, specialty retail, insurance, media, medical equipment, healthcare providers, and pharmaceuticals. We consider the companies’ general sustainability engagement through reviewing their CSR reporting and GRI involvement. Results vary by industry, but about 78% of these firms publish CSR reports and 75% engage in some level of GRI reporting at June 2017 (see Table 1). We then examine the link between sustainability, leadership, and gender diversity using data from the firms' websites, CSR reports and 10-K documents, plus additional information from Bloomberg, Forbes, and GRI. Variables measured include the CEO’s gender; the proportion of women members on the Board of Directors; the presence of Board committees charged with sustainability oversight; the gender of these committees’ chairs; the presence of sustainability officers; and their gender. Table 2 summarizes the results. We observe differences in sustainability governance and executive gender diversity by industry as well as across firms; e.g., all 15 food companies have designated sustainability leaders, while not one of the 16 software firms has a Board committee with sustainability oversight. Overall, only one in five companies has such a Board committee, and almost half of the 107 firms have at least one person as a designated sustainability leader. Table 2 also indicates that the presence of women leaders in the sustainability domain appears strong. In this sample of global firms, women CEOs (7/107) and board members (22.5%, on average) are few, but women executives chair 64% of the sustainability board committees, and 58% of the companies’ sustainability leaders are women. The implications of these results support Ignatian values of diversity and inclusion, as women take on the opportunity for innovative leadership in sustainability.