Understanding Diversity and Sustainability Performance via a Novel Data Analytics Approach

Complex adaptive systems such as economies, ecosystems, or organizations require diversity to thrive and survive. Within a business, diversity can create greater robustness, allowing better adaptation and flexibility in response to the external environment, and a provides a driver for novelty and change. This paper examines how ethnic and gender diversity in leadership contributes to sustainability performance in FTSE 100 organizations, measured using the Environmental-Social-Governance (ESG) risk score. Such a contribution has been difficult to demonstrate in the past and evidence suggests no linear relationship. This paper uses functional clustering, a novel analytics method from the field of ecology, to show that greater ethnic and gender diversity leads directly to better sustainability performance in FTSE 100 companies. The results show clear benefits from gender diversity to sustainability performance and practices. Conclusions, limitations and implications for research and practice are noted.