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This study investigates the relationship between bank boards' characteristics and their commitment to divest from fossil fuels. Using data on worldwide listed banks from 2016 to 2022, the results show a positive influence of board gender diversity on bank divestment from fossil fuel companies. We find that this result holds even following numerous robustness tests. A sub-sample analysis reveals that the effect of board gender diversity is significant for laggards' countries in environmental performance. These results highlight that greater gender diversity in board composition promotes sustainability, facilitating a shift towards business models prioritizing environmental goals. Evidence also offers valuable insights for policymakers in their efforts to align financial activities with sustainability goals. By embracing these implications, banks can contribute to the global transition towards a more environmentally sustainable and socially responsible future. • Fossil fuel phase-out emerged as a hot topic at the last COP28. • We examine the effect of board gender diversity on fossil fuels financing. • We apply various econometric specifications to test existing arguments. • Gender diversity is linked to reduced funding for the fossil fuel industry. • The effect is more pronounced for laggards' countries in environmental performance.
Cosma et al. (Tue,) studied this question.