This study investigated the influence of board gender diversity (BGD) on the relationship between environmental, social, and governance (ESG) practices and corporate financial performance (CFP) in 26 energy companies listed on stock exchanges in Nordic countries from 2017 to 2022. This study utilises stakeholder theory and diversity, equality, and inclusion (DEI) theory to provide theoretical explanations. Board gender diversity (BGD) is measured by the proportion of female directors to total board members, while CFP is assessed through return on assets (ROA) and Tobin’s Q. ESG performance is evaluated using a one-year lagged combined ESG score and BGD is similarly assessed using a one-year lagged BGD score (from 2016 to 2021). All the quantitative data were obtained from the Refinitiv database hosted by Thomson Reuters. The study employed the two-step generalised method of moments (GMM) regression technique and hierarchical model approach to analyse and interpret the regression models.

The findings of this study are mixed. The empirical results indicate that ESG practices positively and significantly impact Tobin's Q (market performance), which aligns with stakeholder theory. Surprisingly, ESG is found to have a significant negative relationship with return on assets (ROA). Furthermore, the study examines the moderating role of board gender diversity (BGD), revealing that the combined interactive effect of BGD and ESG, positively moderates the ESG-ROA relationship, which is consistent with DEI theory. However, the moderating effect of BGD on the ESG-Tobin's Q relationship is found to be insignificant.

This study pioneers the examination of board gender diversity's impact on the ESG-CFP relationship within the Nordic energy sector. The insights from this study contribute to the understanding of sustainable business practices in the Nordic energy sector. Further research should explore the underlying mechanisms and implications of corporate decision-making