In the last few years, growing interest in environmental, social and governance (ESG) issues from investors, employees, customers and other stakeholders has put pressure on companies to act. Sustainability has gone mainstream in the corporate world, emerging as a business approach based on creating long-term value grounded in how a company operates within its ecological, social and economic environment. More leaders today see sustainability as a philosophical starting point for businesses: one that explores the business’s purpose and its long-term value.
As companies respond, the board has become a central player in overseeing and integrating ESG risks and opportunities into their organizations. Yet despite the rising interest, coupled with an undercurrent toward more stakeholder-centric models of governance, boards often lack the experience and skillsets to address these issues head-on.
In light of this, Spencer Stuart and Diligent Institute sought to learn more about how boards are structuring oversight of ESG issues and how they are preparing directors to fulfill their responsibilities as they evolve and expand. We surveyed 590 corporate directors to get their insights on how boards are addressing ESG, how they’ve adjusted to address ESG topics, and what they are doing to increase their overall board competency around ESG.
In particular, our survey shed light on the following questions:
- How are boards structuring ESG oversight, as a whole and by different issue areas?
- How has the pandemic impacted discussions around ESG?
- How are boards integrating ESG-related risks and opportunities into other aspects of the business, like strategy and executive compensation?
- How are organizations working to increase director competency and fluency around ESG?
- How do the above questions differ by classification (public vs. private), industry and geographic location?
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