At the board and management level, ESG responsibilities (Environmental, Social & Governance) have historically been considered secondary or even tertiary board issues. Too often, boards narrowly relegate “ESG” to a single aspect, such as emissions or political spending. The ESG umbrella, however, is very broad, and boards are finding themselves devoting more and more attention at the request (or demand) of their investors.
In this episode, Granville Martin, the SVP and General Counsel for the Society of Corporate Governance, joins host TK Kerstetter to discuss the increasing importance of ESG oversight in today’s boardrooms.
One of the things that has changed over the last five to ten years is the volume and frequency at which investors have begun to ask questions. At the same time, boards have become more involved with their own investors, so they’re hearing [more about ESG]. There’s now a ‘push me, pull you’ dynamic.
There’s no doubt that ESG reporting has become more prevalent. Five years ago, only 20% of the S&P 500 was reporting ESG metrics. In 2015, that number more than quadrupled to 81% (per a PwC Governance Insights Center report). As Martin explains, some boards may already be overseeing and reporting on ESG-related issues; now they need to communicate their efforts using the proper nomenclature. This episode addresses several critical questions for boards:
- What are the main components of ESG that boards often overlook?
- Why has ESG garnered increasing attention in the last few years?
- What can boards do to keep pace with everything that’s happening?