Board Gender Diversity and Carbon Trade Finance: Evidence From Multinational Corporations on the Role of Institutional Quality and Cultural Environment

Babajide Oyewo, Olayinka Moses and Nurlan Orazalin

Business Strategy and the Environment, 2025, vol. 34, issue 4, 4165-4190

Abstract: This study investigates whether board gender diversity influences carbon trade finance and ultimately achieves decarbonisation targets. Using a dataset of 5198 firm‐year observations from 336 multinational corporations (MNCs) spanning 42 industries and 32 countries over the period 2006–2022, we employ panel regression analysis to uncover key insights. Our findings reveal that although board gender diversity is positively associated with carbon trade finance, a critical mass of at least four female board directors is necessary to exert significant influence. Our results highlight the critical role of institutional factors, such as high control of corruption, strong voice and accountability, government effectiveness and a strong rule of law, in enhancing the impact of board gender diversity on carbon trade finance. Additionally, cultural environments play a pivotal role in shaping the relationship between board gender diversity and carbon trade finance. Our main conclusions are robust across alternative measures and validated using two‐stage least squares and propensity score matching techniques. We contribute to the literature on board gender diversity and carbon trade finance by empirically demonstrating the role of (in)formal institutional factors that influence the effectiveness of female directors in achieving sustainability outcomes. The findings offer valuable policy and practical implications for managers, regulators and stakeholders, shedding light on the interplay among board gender diversity, carbon emissions management, and the governance and cultural contexts at the country level.

Date: 2025
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