A large body of evidence links board diversity to stronger environmental, social, and governance (ESG) outcomes, and diversity mandates rest on the premise that changing a board changes what a firm does. We test this premise within firms over time using materiality alignment, the closeness of a firm’s allocation of ESG emphasis across pillars to its industry’s materiality profile. Drawing on an unbalanced panel of ESG-rated U.S. listed firms over 2011–2022, we combine trajectory and transition analysis, between-versus-within decompositions, recovery models, formal industry-materiality checks, and measurement-robustness tests. The cross-firm relationship between female board representation and alignment is strong, yet it does not reappear within firms: once firm and year effects are absorbed, board composition changes are not followed by alignment changes, and board size is the only attribute with a consistent within-firm relationship. Alignment is instead highly persistent: firms sort into five durable trajectory classes, roughly half remain persistently aligned, and movement from weak to strong alignment occurs in under 6% of firms. Among initially misaligned firms, recovery depends on capacity already in place, namely firm size and established female representation, rather than short-run board change during the main three-year window. Five-year recovery checks suggest that board change becomes visible only over a longer horizon, and even then, modestly. Board diversity thus marks accumulated capability rather than a near-term adjustment mechanism, so mandates warrant evaluation over longer horizons.
Arouri et al. (Sun,) studied this question.