ESG may be a hot topic, but a quick internet search will give you a snapshot of the breadth of possible interpretations behind those three words. Boards need to see their way through the myriad of definitions, interpretations and priorities that have come to be ESG. The question is: how?
Increasing demands can propel unprepared organisations into an imbalanced or inappropriate response. So it’s vital to have a clear consensus about
Environment and Society are not new topics. Many boards have had climate impacts on their risk registers for some time. Subjects like employee wellbeing, supply chain risks, data security and AI have also taken a higher priority in board agendas of late.
What we are seeing now is a huge acceleration in the emphasis on ESG from all angles. Although it has been given less prominence, governance can be key to getting ESG right for your organisation.
Effective governance builds on what has already been achieved and will help you prioritise the elements of ESG that matter most to your organisation. It allows you to create an impactful and sustainable mechanism for addressing ESG as part of your organisation’s overall purpose, vision and strategy.
The ESG agenda requires sustained, long-term action and vision. This is where the Board can play a unique role. So, the Board needs to ensure it fully understands, and engages with, ESG issues in order to steer organisations over the long term.
This means asking questions like:
Getting answers on these questions will show you where the company stands on ESG maturity. It will also show you what your immediate action steps should be.
This is a time of opportunity as well as challenge. As governance professionals we are in a unique position to help boards develop a meaningful definition of ESG and to create effective frameworks for addressing it. When Boards are encouraged to look at ESG through the prism of the G, they are far more likely to find the benefits in addressing it as part of their organisation’s overall purpose, vision, and strategy.
Viewed like this, ESG becomes an opportunity to create long-term value for your organisations and contribute to building a better world for everyone.
We will be discussing ESG at our upcoming Governance 2022 conference.