Religiosity in Gender-Diverse Companies Improves Their Performance and Ethics, Study Finds

The religious beliefs of corporate managers and employees in firms that encourage gender diversity is a critical factor in determining their environmental, social, financial and governance outcomes while helping reduce unethical behavior, a recent international study has found.

(Photo by fizkes,
(Photo by fizkes,

The study, conducted by researchers at University of Portsmouth, Brunel University and Loughborough University—all in Great Britain—looked at 3,902 companies from 29 countries over a 14-year period from 2005 to 2019.

The researchers examined the firms’ environmental, social and governance (ESG) performance. In particular, the team focused on what is known as ESG “decoupling data”—the gap between what the firms disclosed about their ESG practices and what their performance actually was.

The researchers found that higher levels of religiosity among managers and employees has a positive impact on their companies’ ESG performance, because the individuals are better than their irreligious peers at adhering to community ethical norms.

Further, the research team uncovered, companies that employed more female leaders were less likely to downplay their environmental impact—a process known as “greenwashing.” The phenomenon is more conspicuous in companies that do business in environmentally contentious industry segments.

“Our study supports existing theories that women directors are crucial players in preventing this [covering up or making less of their company’s environmental impact], as they are more likely to speak out against unethical behavior, and support environmentally conscious decisions,” said Ahmed Aboud, Deputy Director of The Centre for Innovative and Sustainable Finance and a reader in accounting and financial management at the University of Portsmouth’s Faculty of Business and Law.

“Our study contributes to the growing debate on ESG decoupling, offering policy insights to regulators and policymakers into the role of board gender diversity and religiosity in reducing unethical managerial behavior,” Aboud and his co-researchers wrote in a research paper in Business Strategy and the Environment, an academic journal.

Paradoxically, the researchers also discovered that gender-diverse companies based in countries where religious beliefs are less pronounced had a greater impact on reducing ESG decoupling.

“Countries with higher levels of religiosity tend to adopt views supporting traditional gender roles between men and women, and as a result see female directors being less influential in their roles,” explained Yasser Eliwa, a senior lecturer in accounting and finance at the School of Business and Economics at Loughborough University. Their team study “is consistent with other studies which suggest religious differences among countries can influence corporate decisions.”


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Religious Beliefs Gender Diversity Ethics Environment