The Role Of The Board In ESG
Environmental, social and governance (ESG) considerations are gaining more traction in tandem with the increased demand for greater corporate transparency and accountability to stakeholders. The scope of ESG is wide, ranging from issues like climate change and income inequality, to gender diversity, ethical practices, and greater stakeholder participation or input in decision-making. Investors are becoming increasingly concerned with how ESG factors affect the value of their investments, and the term “sustainable investing” is finding its way more frequently into stakeholder conversations, positioning ESG as a factor in decision-making that may have an impact on value creation.
Board members therefore need to understand the ESG impacts on business strategy, and the risks and opportunities these present, as a host of challenges confronts their organisations today. Increasingly dynamic market trends, rapidly evolving technology, even climate change, are some of the factors driving how shareholders and stakeholders are making investment decisions. As companies progress, they will need to respond to demands for greater disclosure and more information on how they operate – and this may translate directly into their ultimate competitiveness. This implies greater Board oversight of ESG issues, and greater accountability on matters pertaining to ESG.
6 The IERP® Monthly Newsletter September - November 2021