Does Board Gender Diversity and Independent Drive Affect Corporate Sustainability Performance? Evidence from Malaysia

The underrepresentation of women on corporate boards remains a global concern. Malaysia has taken steps to address this issue through the Malaysian Code of Corporate Governance (MCCG 2021), which recommends a minimum of 30% female directors on boards. However, as of April 2025, the percentage of women directors in Bursa Malaysia stood at only 28% across all PLCs, indicating a gap between policy recommendations and actual implementation. This study examines the impact of board gender diversity and independence on corporate sustainability performance (CSP), proxied by the total ESG score. Using data from Refinitiv Eikon, the study covers 1,028 firms listed on Bursa Malaysia's main and ACE markets between 2019 and 2024, resulting in 6,168 firm-year observations. After excluding firms with insufficient ESG data, the final sample comprises 936 firm-year observations. A fixed-effects model was employed to analyse the unbalanced panel data. The results reveal that board gender diversity and board independence significantly enhance CSP. Additionally, board independence strengthens the positive relationship between board gender diversity and CSP, demonstrating its moderating effect. Robustness checks confirm that board gender diversity similarly influences both the environmental and social pillars. The findings provide empirical evidence supporting the role of board gender diversity and independence in promoting corporate sustainability. These insights have practical implications for investors and policymakers, emphasising the need to prioritise gender-diverse board compositions as Asian markets increasingly focus on corporate governance reforms.