Saving the Earth by Making Energy Industry’s Boardrooms Diverse
The U.S. energy sector accounts for 83.6 percent of the country’s carbon emissions, according to the Environmental Protection Agency, so tackling climate change effectively requires their participation. Some experts worry the lack of diversity in their leadership is hindering that shift.
Energy-sector boards are the least diverse of any industry globally, with 8.2 percent of seats occupied by women, compared with an average of 10.5 percent for all businesses, according to data compiled by Bloomberg. That translates to an average of just 0.7 women on the board of each of the 650 energy companies in Bloomberg’s review.
More than 170 countries signed the Paris Agreement in April, which aims to limit the global temperature increase to below two degrees Celsius. If this target is going to be met and the transition to a “de-carbonized” economy made, companies will need to fundamentally change, so leadership teams also have to change, said Rachel Kyte, chief executive and special representative of the UN Secretary-General at Sustainable Energy for All.
“It’s like this bus is coming toward us,” Kyte said of climate change and the transition to renewable energy. “If you keep asking the same people and they keep coming up with the same answer, we’re not going to manage this transition very well.”
More women could help boards address climate change targets because they bring different perspectives on how to interpret and tackle risk, she said.
More than 51 percent of companies in the energy sector have no women on their boards. The biggest of these by market capitalization are Beijing-based PetroChina Co. and Cnooc Ltd., and Moscow-based Gazprom PAO, Rosneft OAO and Lukoil PJSC, Bloomberg data show. The companies didn’t respond to e-mailed requests for comment.
A further 29.3 percent have one woman on their board, compared with 31.6 percent at companies across all sectors, according to data compiled by Bloomberg.
“There is a clear parallel between the progress we’ve seen on gender equality and climate change over the last six years,” Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, said in a statement relating to the Two Degrees of Change conference held in London in April. “Evidence suggests that a greater presence of women in the boardroom and in senior leadership roles can help increase the corporate focus on climate change.”
About 160 policy makers and investors attended the conference which linked the topics of gender equality and climate change.
Research by Catalyst Inc., a nonprofit that promotes gender equality for women in the workplace, shows that companies with greater gender diversity are more supportive of corporate and social responsibility programs, according to Brande Stellings, vice president of corporate board services.
Companies with gender-diverse leadership teams contributed 28 times more to charitable boards and each additional female board member boosted philanthropic giving by $2.3 million, according to a 2011 Catalyst report that was co-authored by Harvard Business School.
Catalyst research also shows a correlation between financial performance and board diversity among Fortune 500 companies, Stellings said.
Note: Bloomberg’s universe of board data uses companies’ latest annual filings.
“Having diverse minds around the table leads to better outcomes,” Stellings said in an interview with Bloomberg Brief. “There is work to do in the energy sector.”Women are needed on energy company boards to provide “diversity of thought and perspective,” according to Katie Mehnert, the chief executive and founder of Houston-based Pink Petro. Mehnert started the organization in 2015 to help get more women into the energy industry, throughout the supply chain, and to ready women to take board positions in the fossil fuel and renewable energy sectors. Its backers include Shell and Halliburton.
An increasing number of women from within the Pink Petro network have been getting board seats, Mehnert said, but the industry “absolutely can do more.”
The Independent Petroleum Association of America “encourages diversity” in the energy sector and has three women on its board, the group said in an e-mail.
Though there are mounting claims that greater gender diversity on boards could mean more attention will be paid to sustainability, Bloomberg analysis showed that companies’ ISS Board Score did not show less governance risk when the number of women on the board of those companies increased.
Norwegian companies are the strongest performers in terms of board diversity in the energy sector. Nine of the 12 energy sector companies with women occupying 40 percent or more board seats were from Norway, which has gender quotas for listed companies.
In the U.S., Spectra Energy Partners LP, a master-limited partnership formed by Spectra Energy Corp. has one of the most diverse boards with 42.9 percent of its seats filled by women, according to data compiled by Bloomberg. French company Total SA has 54.5 percent.
“At Total, we are fully convinced that gender equality, and more broadly diversity, adds a dimension to the collective intelligence needed to grow and manage businesses,” said Manoelle Lepoutre, senior vice president of top executive careers and management at Total. “Different perspectives, different attitudes to a range of challenges are critical for identifying new avenues for growth and successes.”