Gender Diversity and Environmental, Social, and Governance: Unlocking Solutions to Corporate Risk

Abstract

This study examines the relationship between Environmental, Social, and Governance (ESG) practices and corporate risk in Asian countries, emphasizing the moderating role of board gender diversity (BGD). Using a panel dataset of 15,496 observations from Asian firms between 2008 and 2020, the analysis employs the Generalized Method of Moments (GMM) model to address potential endogeneity issues. The findings indicate that stronger ESG practices significantly reduce corporate risk, enhance financial stability, and mitigate regulatory and market volatility exposure. Furthermore, the results highlight that higher BGD amplifies this risk-reduction effect, suggesting that diverse boards contribute to better decision-making and risk management. Policy Implications: These findings underscore the importance of regulatory frameworks that encourage ESG adoption and board diversity. Policymakers should incentivize companies to integrate ESG principles and implement gender diversity policies, such as board quotas or disclosure requirements, to enhance corporate resilience and sustainable economic growth.