Transforming Board ESG Oversight

With the growing emphasis of environmental, social, and governance (ESG) issues in recent decades, boards should assess how they are approaching ESG matters and consider what constitutes robust ESG oversight. Two seasoned business leaders—an ESG advisor to CEOs and boards of directors for the past 30 years and a senior executive of global companies—share their insights about ESG transformation.

Over the past two decades, environmental, social, and governance (ESG) issues have been appearing more frequently on CEO and board agendas. In recent years, the pace has accelerated rapidly, driven by investor interest, competitive pressure, and human capital issues. Investors ask about ESG oversight, ESG ratings (put forth by Institutional Shareholder Services, MSCI, S&P Global, etc.), workforce diversity, ESG tied to compensation, and even corporate culture as companies assess their likelihood to achieve growth goals and remain resilient in the face of challenges. Competitors are setting net-zero goals for greenhouse gas, or GHG, emissions and launching products that are purportedly better for the environment. Employees routinely indicate they care about company purpose. And the role that businesses play in uplifting people and society is becoming increasingly adjoined with environmental and social justice expectations...