The expectations of shareholders around ESG (environment, social and governance) are moving quickly past awareness. Presently, and moving forward, shareholders are expected to be much more proactive regarding ESG issues. What is the range of issues that concerns them?
- Climate change
- Water resources
- Working conditions
- Human rights
- Employee diversity
- Gender inequality
- Board diversity
- Executive pay
What Is the Danger of Not Addressing ESG Properly?
The danger of not addressing ESG properly is that investors may pass you up in favor of the competition. In 2017, the asset manager at State Street Corporation took a strong stance about male-only boards with the approximately 400 publicly listed U.S. companies. The company voted against the chair or most senior board members of the governance committee where all board directors were male. This stance may stem from financial research that Credit Suisse and MSCI published within the last several years that showed that companies with female directors generated better returns than all-male-led companies. There's no question that ESG is a major up-and-coming issue and will be for some time. Here are five ways that boards aren't properly addressing ESG issues that investors are sure to take notice of:- Not Linking ESG to Strategies
- Cut water use in connection with its product by 50% between the years 2010 and 2020.
- Achieve 100% sustainable sourcing of agricultural raw materials.
- Reduce consumer waste disposal by 50%.
- Achieve an even greater reduction in manufacturing waste.
- Failing to Address Diversity
- Failing to Proactively Communicate Their ESG Efforts
- Directors Should Continue Integrating Broader Social Considerations into Risk Assessment Practices
- Evaluating the Board's Role in Oversight of ESG Issues
ESG & Modern Governance
The heavy focus on ESG issues is a modern approach to corporate governance. Modern issues call for modern solutions for how boards can address and oversee ESG issues. Board management software by Diligent is the best suite of digital tools for a modern approach to corporate governance. From a highly secure board portal to the entire suite of governance tools that comprise Governance Cloud, Diligent supplies boards' needs to manage all aspects of ESG.Media Highlights
Environmental, social and governance (ESG) issues have become more complex and multifaceted than ever before. At the same time, ESG continues to ascend on board and leadership agendas.
In this buyer’s guide, we explore what a market-leading ESG solution should look like and highlight the key areas organisations should be prioritising as they embark on their search.