Equity mutual funds' interest in the environmental, social and governance policies of target firms: Does gender diversity in management teams matter?

The current paper analyzes whether and to what extent gender diversity (GD) in investment management teams impacts equity mutual funds' interest in the environmental, social and governance (ESG) policies of target firms. The impact of GD has been investigated from a dual perspective: the link between the proportion of women on management teams and the application of ESG screens and the role of critical mass theory in teams' decision-making process. Based on a sample of 212 European equity mutual funds over the 2014–2018 study period, we find a positive impact of the proportion of women and critical mass on the ESG rating of investment portfolios. Evidence from the current study advances the literature on the GD effect and ESG screening while providing additional indications for equity mutual funds seeking the best ESG performance and sustainable development of target firms.