Effects of diversity in senior management teams on corporate sustainability of South African publicly listed companies

Abstract

This study examines the effects of diversity within senior management teams on corporate sustainability of South African publicly listed companies. While earlier research has examined the effects of diversity on organisational performance, limited research has focused on the link between diversity in senior management teams and corporate sustainability outcomes in the South African context. A sequential mixed-methods approach was employed. First, quantitative data was collected using secondary data from publicly available sources, especially the integrated annual reports. Key indicators of diversity within senior management teams, including gender, race, and age were examined alongside corporate sustainability outcomes. Secondly, qualitative data was collected through interviews conducted with senior managers to gain insights into their perceptions of diversity and its influences on sustainability outcomes. The quantitative elements exploring the influence of diversity in senior management on corporate sustainability within the top 40 JSE listed companies uncovers a statistically significant relationship between White executive demographic composition and firm sustainability practices, but a positive correlation and statistically partially significant relationship between ESG Score and Black demographic executives. With regards to age, executives in the 50-59 Age group exhibit moderately positive correlations with ESG Score and statistically significant results while the 40-49 Age group exhibit low negative correlations with ESG Score and statistically partially significant results. Notably, executive members gender shows no correlation with ESG Score. Insights from interviews with 12 managers reveal consensus on the positive impact of diversity within organisations. Managers highlighted that diversity contributes significantly to organizational growth, foresters’ innovation and enhances environmental, social and governance practices. These results provide useful insights to organisations, policymakers, and stakeholders on the potential benefits of diverse leadership teams in driving sustainability performance.