Diversity helps: a new study shows more women on boards can improve how businesses are managed
Diversity in leadership isn’t just about ticking boxes. New research on lisetd New Zealand companies finds it’s also about making businesses stronger.
7 March 2025
Despite large multinational companies such as Goldman Sachs, Paramount, Google and others removing their diversity, equity and inclusion policies, the evidence is clear: having a diverse team can help businesses make better, more empathetic decisions.
At the top level, a growing body of research shows having more women on corporate boards leads to better decision-making, stronger governance and improved environmental, social and governance (ESG) performance.
Women make up 50.8% of the population and hold 40.8% of parliamentary leadership roles. But they hold only 28.5% of board seats and 26.4% of executive roles in the New Zealand’s Stock Exchange (NZX) top 50 companies (the NZX50).
And while businesses are encouraged to disclose gender diversity policies by the NZX, there are no mandatory quotas, leaving progress uneven.
However, change is happening. Our new research looked at the the percentage of female directors in NZX-listed firms between 2016 and 2022.
What we found is positive. Using information from financial infrastructure and data provider LSEG’s database on global financial markets, we identified a rise in the number of female directors on corporate boards. We also saw a corresponding improvement in the firms’ ESG performance.
Despite making up 50.4% of the population, women hold only 28.5% of board seats and 26.4% of executive roles in NZX50 companies.T. Schneider/Shutterstock
Boosting performance
Between 2016 and 2022, the proportion of female directors in NZX-listed firms increased from 26% to 36%. These same businesses saw an average 33% improvement in their ESG performance.
Notably, governance – one of the key ESG pillars – improved significantly, with a 31% increase on average. Governance specifically refers to the effectiveness of the firm’s management systems, board structure and capacity to protect shareholder interests.
While it’s not possible to say outright that having more women on the board directly influenced governance outcomes, we saw a positive relationship between the two. This suggests having more women in leadership strengthens corporate oversight and ethical decision making.
Gender diversity does not have the same level of importance in all contexts. While social and environmental performance also improved, this study found no significant link between a more gender-diverse board and these higher scores in social and environmental performance.
Our findings are supported by overseas research suggesting board diversity does not strongly influence sustainability outcomes when it comes to issues and groups already covered by legislation.
Therefore, New Zealand’s proactive stance on issues such as the environment, poverty and human rights, as well as encouraging private companies to improve sustainability and transparency, may explain why board diversity had no notable impact on social and environmental performance in this study.
What women bring to the business
Our findings align with studies completed overseas.
In the US, one study found women business leaders tended to prioritise transparency, fairness and stakeholder interests. This made them strong advocates for sustainable and inclusive business practices.
It’s clear that addressing the gender gap in corporate New Zealand isn’t just about fairness. It’s about economic success. Businesses that embrace diversity perform better, attract top talent and enhance their reputations.
The solution isn’t simply about enforcing quotas, but ensuring more qualified women are placed in leadership roles. Companies need to move beyond a “compliance mindset” and recognise true diversity strengthens governance, reduces risk and drives long-term success.
As the world celebrates International Women’s Day on March 8, businesses need to realise that increasing female representation at the top isn’t just the right thing to do – it’s the smart thing to do.
Ramona Zharfpeykan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
