When it comes to boards’ top ESG priorities, a majority of board members worldwide (75%) agree that a coherent ESG strategy helps to create sustainable organisational value and stronger financial outcomes, said WTW recently.
However, many believe there are limited resources available to help tackle the specific areas of governance and environmental issues of boards’ top ESG priorities, WTW added.
This is according to a survey of 349 board members of global organisations from 44 countries across six continents conducted by WTW and the Nasdaq Center for Board Excellence.
The top factors influencing board members to prioritise sustainability themes are alignment with business strategy (85%), moral and ethical reasons (78%), long-term organisation value creation opportunities (74%) and business reputation among stakeholders (73%), according to survey results.
In addition, more than half of respondents cited shareholder/investor attraction and expectation as a factor, WTW said.
“Board members are evolving their ESG agendas from reacting to stakeholder pressure to proactively linking ESG to business strategy,” said Kenneth Kuk, senior director, Work & Rewards, WTW. “As a result, we are seeing greater interest in addressing skills and resource gaps and more emphasis on oversight of emerging risks.”
Survey highlights
- Social – human capital (82%) and governance (70%) areas are in boards’ top ESG priorities. But only half of organisations rank environmental - climate in the top three.
- While companies report a minor skills gap in the areas of social and governance, half of organisations (48%) report room for improvement with respect to skills and knowledge base for dealing with environmental - climate concerns.
- The survey also reveals the need for stronger governance in the boardroom.
- Only three in five respondents think their board has dedicated sufficient time and resources to this area.
- This exposes the company to a range of risks, including cybersecurity and data privacy and management, succession planning and board effectiveness.
- Nevertheless, as boards’ oversight rapidly increases, companies are acknowledging a need for specialist responsibilities in the coming years.
- While oversight of comprehensive governance topics will continue to be a full board matter, more organisations expect to have a dedicated ESG, corporate social responsibility or sustainability committee in the next three years.
