Women Directors Increase Corporate Investment in the Energy Industry

A recent study from the Norwegian University of Science and Technology (NTNU), conducted by Dr. Ishwar Khatri, Advising Editor at Jalbayu, published in Finance Research Letters, examines the impact of women on corporate boards in the energy sector. The findings reveal that companies with greater female representation on their boards are more likely to make investment decisions that prioritize sustainability. While their presence does not necessarily increase overall corporate investment in the energy industry, it plays a crucial role in driving investments toward renewable energy projects. The research challenges the common belief that women are more risk-averse, revealing instead that they are more likely to support investments that focus on protecting the environment.

Publicly listed energy companies across 55 countries were investigated

The research looks at how women directors impact capital allocation in energy companies, using data from 567 publicly listed energy companies across 55 countries between 2002 and 2022. While the study finds that having more women on a company’s board doesn’t significantly affect overall investment in the energy sector, it does have a positive effect on investment in renewable energy. In other words, energy companies that invest in renewable energy are more likely to increase their investment when they have more women on their boards, compared to those with fewer or no women directors.

The findings suggest that women directors tend to take a more cautious, long-term approach to decision-making, prioritizing sustainability-related investments. These investments may require significant initial capital but offer long-term financial and environmental benefits.

Women’s presence on boards must be substantial to drive impact

The study also finds that renewable energy companies with fewer than three women directors on their boards had insignificant influence on corporate investment. In contrast, companies with at least three women directors demonstrated a strong commitment to sustainable investment practices.

“The capital expenditure in renewable energy companies increased significantly when there were at least three women directors on the board. This suggests that simply having women on boards is not enough to influence corporate investment—there must be a sufficient number for their voices to impact board decisions,” Dr. Khatri emphasizes.

Gender-diverse boards drive both governance and sustainability

Previous research has shown that gender diversity on corporate boards enhances board effectiveness by improving corporate governance. This new study goes a step further, suggesting that female board members are not only strengthening governance but also driving firms toward sustainability. Additionally, the findings highlight the crucial role women directors play in shaping corporate investment strategies, especially in industries where environmental impact is a major concern.

Dr. Khatri suggests that “increasing women’s presence on boards is key to promoting sustainable corporate investment.”

As the world shifts toward greener practices, this study shows how important women are in corporate boardrooms when it comes to driving sustainable investments. The findings strongly support having more women in leadership roles, especially in industries that face high scrutiny for their environmental impact.

(Source: Khatri, I. (2025). From Risk Aversion to Sustainability: How Women Directors Influence Investment in the Energy Firms?. Finance Research Letters, 107213. https://doi.org/10.1016/j.frl.2025.107213 )