Breaking barriers and driving green change: Female board presence, environmental innovation, and the power of effective audit committees

Abstract

The current study examines the interaction between board-level gender diversity and audit committee effectiveness to determine its effects on environmental innovation among Malaysian publicly traded companies. The study uses regression models based on a five-year panel data set of 198 firms containing 990 annual observations (2020–2024). Environmental innovation is operationalized using the environmental innovation score published in Refinitiv Eikon, and the gender diversity of the board and effectiveness of the audit committee are proxied using published corporate governance measures. The empirical findings reveal a strong, positive association between female representation on the board and the participation of the firm in eco-innovative activities. More critically, it is observed that audit-committee effectiveness increases this influence, with the conclusion that careful audit oversight enhances the impact of women on the environment. A combination of the results supports the conclusion that inclusive leadership and effective governance systems can help foster corporate environmental innovations. The research is relevant to the literature as it establishes a wider geographic and thematic focus of the previous investigation and provides regulators and companies with practical considerations with plans to improve sustainability performance by diversifying the boards and increasing the effectiveness of audit committees.