42 A Reflection on Board Composition Diversity and its External Impacts
Chafika Eddine; William Fung; and William Holmes
Abstract
Board decisions can greatly affect business and, as a result, can impact stakeholders and the planet. Companies tend to prioritize ESG risks internally without much consideration for external consequences. This study proposes that corporations can contribute to climate action and sustainability by building a board that combines demographic and cognitive diversity. The investigation aims to compile an initial understanding of board composition diversity and the fundamental aftereffect for organizations adopting a longer-term view when analyzing the consequences of their activities, such as climate change and sustainability, in addition to simply considering financial outcomes. One significant lever to effect change toward a more sustainable world points to increasing diversity on board composition. Boards should be representative of their stakeholders with respect to gender and racial/ethnic diversity.
Keywords: corporate governance, board composition, ESG, climate change, gender diversity, sustainability