Boards Are Obstructing ESG at Their Own Peril
Environmental, social, and governance issues have a greater impact on company finances than many directors realize. by Summary.
Asset owners, asset managers and even many chief executives now consider ESG issues essential for financial performance. But corporate directors are lagging. PWC’s 2020 Annual Corporate Directors Survey found that only 38% of board members think ESG issues have a financial impact on a company. A main part of the problem is that boards lack ESG expertise, according a new study by the authors. The authors recommend several remedies to bring boards along with the ESG revolution: recruit directors with ESG experience; require the board to identify material ESG issues; board members should require executives to o report on the financial impact of their ESG investments, including intangible and tangible benefits such as risk avoidance, employee retention and operational efficiency as per model
From Bloomberg: Many corporate boards in the U.S. are unprepared to tackle the environmental risks posed by the climate crisis, primarily because few of their members have the background to truly understand what's at stake. Of the 1,188 directors at 100 of the biggest U.S. companies, just 6% had 'relevant credentials' in environmental protection and only 0.3% had expertise in either climate- or water-related issues as recently as 2018, according to a study released by New York University's Stern Center for Sustainable Business.
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