Green But Not Blind! The Impact of Female Directors on Biodiversity and Environmental Risks in Banks

Abstract

This study investigates the role of board gender diversity in fostering the integration of biodiversity and environmental risks into the financing decisions of banks. Using a panel of 275 banks from 2013 to 2022, we find that board gender diversity increases the probability that banks take BER (Biodiversity and Environmental Risks) into account in assessing financing applications by corporate customers. This is consistent with studies showing that female directors tend to be more careful about risks and more concerned about environmental issues. This result is robust to the use of several alternative econometric specifications and tests to address endogeneity issues. Importantly, we also find that the influence of board gender diversity on BER assessment is confined to countries where the banks’ exposure to BER matters the most.

Keywords: biodiversity finance, climate change, banks, board structure, corporate governance.