Board gender diversity and ESG performance balance in GCC firms

• Female board representation enhances overall ESG performance in GCC firms. • Gender diversity has the strongest impact on social performance among ESG dimensions. • Higher female representation shifts focus from governance to social priorities. • Study uses novel methodological approach to establish causality in GCC firms. • Female directors improve stakeholder engagement while ensuring strong governance. This paper examines the transformative role of board gender diversity in shaping both the absolute performance and strategic prioritization of environmental, social, and governance (ESG) dimensions in Gulf Cooperation Council (GCC) firms. Using data from 132 non-financial firms (2013–2022), we employ simultaneous equations modeling and relative weight analysis to investigate this dual impact. Our findings reveal an interesting relationship: while female board representation enhances absolute performance across all ESG components, it simultaneously drives strategic rebalancing of priorities. Specifically, boards with higher female representation maintain strong governance standards while proportionally elevating the emphasis on social and environmental performance dimensions. This calibrated reweighting suggests that female directors bring distinct perspectives to sustainability strategy, rather than simply improving ESG metrics uniformly. Using the GCC context, where board diversity remains notably low, we provide novel insights into how gender composition shapes not just the magnitude but also the balance of corporate sustainability efforts in emerging markets. Our study contributes to the literature by showing that board diversity's influence extends beyond absolute ESG performance to the strategic balancing of sustainability priorities.